Top Investment Picks from Warren Buffet for 2025 Portfolios
Buffett's magic touch has led to exponential wealth accumulation for him and Berkshire Hathaway shareholders. His ability to spot value overlooked by others, combined with his unshakable patience and temperament, sets him apart in the realm of investing. Market volatility doesn't faze him because he focuses on the long-term value of businesses.
Three of our top contributors suggest investing in three stocks for 2025: Amazon, T-Mobile US, and Ulta Beauty.
Invest in Growth with Amazon
Amazon is a security that Berkshire has held since 2019, and its 10 million share stash at the end of 2024 speaks volumes. The company's diverse portfolio, with online and physical stores combining for over half of its $620 billion revenue, reflects its strength. Amazon's operating profit has surged 55% year over year to $17.4 billion thanks to reducing costs with automation, AI services' growing demand, and bolstered ad and third-party seller services.
Though AWS, Amazon's cloud services division, dominates profit growth, non-retail services, including advertising and third-party seller services, also contribute to its continued success. Subscription service sales, like Prime and entertainment offerings, grew by 11% last quarter, demonstrating Amazon's expanding appeal to consumers.
T-Mobile: A Telecom Titan
Investors seeking stability and dividends may consider T-Mobile. Competing in a telecom triopoly with AT&T and Verizon, T-Mobile boasts stable cash flows, high barriers to entry, and an attractive service that won't be easily disrupted.
T-Mobile outperformed its competitors in 2024 by focusing on network expansion and spectrum management, driving annual service revenue to $16.7 billion and postpaid monthly contract revenue to $13.3 billion. Its robust financial position, with less debt than rivals, positions it for acquisitions and a leadership role in 5G coverage.
Ulta Beauty: A Bargain Worth Considering
Ulta's position in a challenging beauty marketplace may have caused it to slide 11% in 2024 while the S&P 500 rose 25%. However, Ulta is poised for a rebound with its new CEO, Kecia Steelman at the helm. As a company veteran, her informed perspective and the potential for inflation moderation could attract buyers.
Enrichment Data: Long-term Investment Prospects for 2025
Amazon
The potential for AI and cloud infrastructure investments to propel Amazon's long-term growth can't be ignored. Amazon expectedly plans to spend over $100 billion in 2025, shaping the future of many industries. Minimal downside risks lie in conservative first-quarter sales guidance and foreign exchange volatility. For short-term pessimism, consider buying Amazon shares later in the year.
T-Mobile US
Investors interested in telecom advantage T-Mobile for its ambitious 5G network expansion and improved rural connectivity plans, aiming to add up to 6 million postpaid subscribers in 2025. Future growth prospects are backed up by a phenomenal financial performance. Analysts agree, rating T-Mobile as a "Strong Buy."
Ulta Beauty
Despite a rough 2024, Ulta's impressive three-year revenue development (27.60%) and Operating Margin growth (7.20%) indicate potential for revitalization. Morgan Stanley has upgraded Ulta to "Overweight," and State Street Corp's increasing stake suggests confidence in its future growth prospects.
Importantly, Buffett's approach to investing, characterized by his ability to identify undervalued businesses and his long-term focus, can serve as a guiding principle for those considering investments in Amazon, T-Mobile US, and Ulta Beauty.
Spectrum management and network expansion have been crucial factors in T-Mobile's ability to outperform competitors in 2024 and position itself for continued success in the telecom industry.
Investors looking for potential growth in 2025 might consider Amazon, given its plans to invest over $100 billion in AI and cloud infrastructure, expected to shape many industries.
The future of Ulta Beauty appears promising, with a new CEO at the helm and analysts' positive outlook, such as Morgan Stanley upgrading Ulta to "Overweight."
