The name Berkshire Hathaway (NYSE:BRK.B) is synonymous with investing success, with a vast array of holdings that touch wide swaths of the economy. The Warren Buffett-managed investment vehicle has delivered incredible gains over the years.
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The past year, not surprisingly, was no exception. The bull market spread the gains far and wide, and Berkshire also enjoyed returns north of 25%.
As 2024 comes to a close, what could be on the horizon for 2025? One top investor known by the pseudonym KM Capital believes that the good times will continue rolling in the year to come for Berkshire Hathaway.
“The company’s diversified business mix, strong fundamentals, and robust cash pile position it well for sustainable growth and outperforming the S&P 500,” writes the 5-star investor, who sits in the top 3% of TipRanks’ stock pros.
KM points to Berkshire Hathaway’s enormous reach into numerous sectors, ranging from insurance to retail to energy and utilities. The investor spots multiple secular growth trends coming up that will propel BRK.B to further gains, including in insurance, manufacturing, and rail transport.
“Such a deep diversification not only mitigates risks of setbacks in separate industries but also positions the company to capitalize across multiple industries,” KM explains.
Berkshire’s deep pockets, of course, will allow the company to continue investing. Its $325 billion in cash on hand and short investments is larger than all but a handful of mega sovereign wealth funds, KM notes.
When it comes to BRK.B’s valuation, the investor believes that the “capital allocation powerhouse is deeply undervalued.”
Though Berkshire has no real peer, posits the investor, looking at the S&P 500 can provide an indication for what’s to come. KM explains that Berkshire’s FY2024 estimated P/E of 23.13 is lower than the S&P 500’s P/E ratio of 27.87. If one uses the S&P 500 multiple as a guide, BRK.B would have room to appreciate by another 20% going forward.
KM Capital is quite high on BRK.B’s “unique” cash position and business model, and rates the company a Strong Buy. (To watch KM Capital’s track record, click here)
Looking to Wall Street, Berkshire Hathaway does not have too many analyst ratings from the past few months. With 1 Buy and 1 Hold, BKR.B is a Moderate Buy. Its 12-month average price target of $490.50 would lead to gains of ~8% in the year ahead. (See BRK.B’s stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
