rtmark
LearnBonds.com

Berkshire Hathaway Inc. (BRK.B) Stock is Both a Growth and Value Play

Berkshire Hathaway

Berkshire Hathaway Inc. stock is both a long term growth and value play, reckons David Rolfe, chief investment officer of Wedgewood Partners.

“Berkshire Hathaway has a significant growth advantage (cash will not flow, it will gush) and a material valuation advantage,” he writes in MarketWatch.

Class B shares of Berkshire Hathaway are down over 5 percent in the past 12 months, compared to a 4 percent drop in the S&P 500 Index.

Berkshire Hathaway

Berkshire Hathaway Should be a Part of Every Long Term Portfolio

On the growth front, Rolfe notes that most Berkshire Hathaway businesses are profit power houses, which should appeal to investors; more so at a time when a large number of analysts on Wall Street expect corporate earnings to decline during 2016.

“Berkshire Hathaway has a significant tailwind given the manifest competitive advantages of their three biggest businesses: railroads; utilities, and insurance,” he adds.

While Warren Buffett forecasts railroad earnings to remain weak during the year, Berkshire’s “recession-resistant” utility business should temper the projected decline. Also, Berkshire’s insurance business could prove to be another island of stability amid the ongoing economic uncertainty. As Buffett himself says, “If the winds don’t blow and the earth doesn’t shake over the next 12 months, Berkshire’s insurance business likely will once again pump out a billion or two or four in underwriting profits.”

On the valuation side, Berkshire Hathaway Inc.  trades at $138 a share, which translates to a price to book of mere 1.3X. That’s cheap by any valuation matrix! Further decline in the stock and Buffett may himself buy his shares back, as is evident from his well-documented desire to repurchase Berkshire stock at around 1.2 times book, or about $125 a share.

Berkshire Hathaway Chart Supports Bullish Call

A look at both the daily and the weekly charts of Berkshire Hathaway suggest the stock has broken out of its down trend and is placed at a key resistance zone; a breakout above which should unlock further upside.

Berkshire spent most of last year in a bear trend. But the appearance of a higher peak and a higher trough last month indicates that shares have reversed trend. $139 is the next key level to watch out for. It coincides with multiple previous price pivots. A close above that zone, on decent volumes, could provide further support to the thesis that the stock has already bottomed, and is ready to mount a serious challenge to take out its life time high of $151.56.

Shares of Berkshire Hathaway Inc.  ended Tuesday at $137.79.

Trusted & Regulated Stock & CFD Brokers

What we like

  • 0% Fees on Stocks
  • 5000+ Stocks, ETFs and other Markets
  • Accepts Paypal Deposits

Min Deposit

$200

Charge per Trade

Zero Commission

Rating

64 traders signed up today

Visit Now

75% of investors lose money when trading CFDs.

Available Assets

  • Total Number of Stocks & Shares5000+
  • US Stocks
  • German Stocks
  • UK Stocks
  • European
  • ETF Stocks
  • IPO
  • Funds
  • Bonds
  • Options
  • Futures
  • CFDs
  • Crypto

Charge per Trade

  • FTSE 100 Zero Commission
  • NASDAQ Zero Commission
  • DAX Zero Commission
  • Facebook Zero Commission
  • Alphabet Zero Commission
  • Tesla Zero Commission
  • Apple Zero Commission
  • Microsoft Zero Commission

Deposit Method

  • Wire Transfer
  • Credit Cards
  • Bank Account
  • Paypall
  • Skrill
  • Neteller

What we like

  • 0% Commission
  • Trade Stocks Via CFDs
  • Authorized & regulated by the FCA

Min Deposit

$100

Charge per Trade

Zero Commission

Rating

Visit Now

80.5% of retail investor accounts lose money when trading CFDs with this provider.

Available Assets

  • Total Number of Stocks & Shares+2000
  • US Stocks
  • German Stocks
  • UK Stocks
  • European
  • ETF Stocks
  • IPO
  • Funds
  • Bonds
  • Options
  • Future
  • CFDs
  • Crypto

Charge per Trade

  • FTSE 100 Zero Commission
  • NASDAQ Zero Commission
  • Dax Zero Commission
  • Facebook Zero Commission
  • Alphabet Zero Commission
  • Tesla Zero Commission
  • Apple Zero Commission
  • Microsoft Zero Commission

Deposit Method

  • Wire transfer
  • Credit Cards
  • Bank Account
  • Paypal
  • Skrill
All trading carries risk. Views expressed are those of the writers only. Past performance is no guarantee of future results. The opinions expressed in this Site do not constitute investment advice and independent financial advice should be sought where appropriate. This website is free for you to use but we may receive commission from the companies we feature on this site.
Avatar