Warren Buffett’s investment strategy involves betting on stocks with long-term growth potential. And the stocks of Coca-Cola (KO), American Express (AXP), and DaVita (DVA) are currently included in his portfolio, which indicates the investor’s confidence in the growth potential of these names. Buffett’s portfolio has been a guide to many investors, and considering these stocks’ solid fundamentals, we think they could be profitable bets as we head into 2022. So, let’s discuss.
The Coca-Cola Company (KO)
This Atlanta, Ga.-based global non-alcoholic beverage manufacturer sells its beverages under popular brand names that include Coca-Cola, Sprite, Fanta, Dasani, Minute Maid, and POWERADE.
On November 8, KO named communication company WPP plc as its Global Marketing Network Partner. The company expects WPP to play a vital role in executing a new marketing model to drive its long-term growth. KO also appointed public relations company Dentsu Inc. as its Complementary Media Partner in selected markets.
On November 1, the company announced that it had acquired full-ownership of sports performance and hydration beverages company BODYARMOR. The acquisition should expand KO’s product portfolio.
For its fiscal third quarter, ended October 1, its non-GAAP net operating revenues increased 16.1% year-over-year to $10.04 billion, while its non-GAAP operating income rose 14.6% from the prior-year quarter to $3.01 billion. Its non-GAAP net income and non-GAAP net income per share stood at $2.82 billion and $0.65, respectively, both registering an 18.2% year-over-year increase.
The $2.29 consensus EPS estimate for the current year (fiscal 2021) indicates a 17.4% year-over-year increase. And the $38.12 billion consensus revenue estimate for the current year reflects a 15.5% improvement from the prior year. Also, KO has an impressive surprise earnings history; it has topped consensus EPS estimates in each of the trailing four quarters.
The stock has gained 8.9% in price over the past year and 7.5% year-to-date to close yesterday’s trading session at $58.95.
American Express Company (AXP)
AXP operates through the three broad segments of Global Consumer Services Group; Global Commercial Services; and Global Merchant and Network Services. The New York City-based company provides charge and credit payment card products and travel-related services internationally.
On December 10, AXP announced that in a partnership with credit services provider Nova Credit, it had expanded credit access to immigrants from several countries. The new digital capability enables people from nine countries to use their credit history to apply for AXP’s personal American Express® Cards. The company expects to extend this service to include more countries in 2022, adding to its revenue stream.
On Dec. 8, AXP declared a $0.43 quarterly dividend per common share, payable on Feb. 10, 2022. This reflects upon the company’s ability to pay back shareholders.
AXP’s total revenues net of interest expense increased 24.9% year-over-year to $10.93 billion in its fiscal third quarter, ended Sept. 30. Its net income and EPS were $1.83 billion and $2.27, respectively, registering a 70.2% and 74.6% improvement from the prior-year quarter, respectively.
The Street’s $9.62 EPS estimate for the current year (fiscal 2021) indicates a 155.2% rise from the same period last year, while the Street’s $41.68 billion revenue estimate for the current year reflects a 15.5% year-over-year increase. In addition, AXP has topped consensus EPS estimates in each of the trailing four quarters.
Over the past year, AXP’s shares have gained 38.7% in price to close yesterday’s trading session at $163.83. It has gained 35.5% year-to-date.
DaVita Inc. (DVA)
Denver, Colo.-based DVA operates as a kidney dialysis services provider for patients with chronic kidney failure or end-stage renal disease (ESRD). The company offers outpatient, hospital inpatient, and home-based hemodialysis services and own clinical laboratories.
On December 9, DVA announced that it powers its North American operations with renewable energy exclusively. The achievement of this goal aligns with DVA’s commitment to sustainability. The company also announced that it plans to be 100% renewable-energy-based across its global operations by 2025.
DVA’s total revenues increased 0.5% year-over-year to $2.84 billion in the fiscal third quarter, ended Sept. 30. Its net income rose 63.5% from the prior-year quarter to $260 million, and its per-share value came in at $2.36, up 84.4% from the same period last year.
The $1.84 consensus EPS estimate for the current quarter (ending December 2021) indicates a 10.2% year-over-year increase. And the $2.91 billion consensus revenue estimate for the current quarter reflects a 0.3% improvement from the prior-year quarter. Furthermore, DVA has beaten consensus EPS estimates in three of the trailing four quarters.
DVA’s stock has gained 17% in price over the past month and 1.8% over the past five days to close yesterday’s trading session at $113.43.
