2 Warren Buffett Stocks You Should Definitely Buy Now

Want to beat the market? Pay attention to what Warren Buffett is buying.

Shares of his holding company Berkshire Hathaway have beaten the market by leaps and bounds for decades. Now, two of Buffett’s current stock picks look poised to pounce.

This Buffett move is almost too good to be true

You know the saying: If something seems too good to be true, it probably is. The key word here is “probably.” In some cases, investors can get the best of both worlds, and that’s currently the case with payment processors Visa (NYSE:V).

Berkshire now has a $2.2 billion stake in the company. Visa operates a wide-moat business model that generates huge profits while also taking advantage of the enormous power of network effects. What price has the market placed on such an incredible business? Visa shares are currently valued at just 29 times earnings—about the same as the average S&P500 warehouse.

How is it possible that one of the most profitable and highest quality businesses on the market is not trading at a premium to the rest of the market? This seems like a mispricing that could be fixed very quickly.

You probably know Visa as a brand and may have one of its credit or debit cards in your pocket. But did you know that the company controls 61% of the credit and debit card market in the US?

Only three companies control the rest. It’s a highly consolidated industry, with only a few major players, and Visa is by far the largest. This gives it pricing power in an industry with low asset values, which results in high profits, high returns on equity, and stable growth rates.

The issues holding stocks back now are short-term. Earnings growth is slowing after a post-pandemic surge, and concerns about the economy, consumer spending and regulatory issues are adding to near-term uncertainty.

But Visa remains Buffett’s ideal stock: Even a weak management team couldn’t thwart Visa’s valuable structural advantages in terms of market share and profitability. Visa trades in line with the rest of the market, and this looks like a chance to invest in a blue-chip stock you can hold for life.

V Price to earnings data comes from YCharts.

This company is going to be a growth monster

Buffett isn’t necessarily known as a growth investor. But there’s one stock in his portfolio that’s currently a monster when it comes to maintaining high growth rates over the long term.

Few American investors know about the company, which operates exclusively in Latin America. But that didn’t stop Berkshire from betting more than $1 billion on the company’s shares.

I’m talking about a digital bank operator Nu Holdings (NYSE:NU) — one of the most undervalued stocks on the market today. The company started in 2013 by offering customers in Brazil a simple debit card. It now has over 100 million customers. And despite the company’s $70 billion market cap, revenues are still growing by over 60% per year.

What is Nu’s secret? He dared to go where the market wouldn’t.

Before the company launched, Latin America was dominated by a handful of banks that charged high fees for basic services and used old-fashioned physical branches. Nu has upended the industry by offering its services directly to consumers via smartphone.

This approach has significantly reduced costs, allowing Nu to compete aggressively. The smartphone-based approach has also allowed it to interact with customers and introduce new services and features much faster than its inept competitors.

Nu stock doesn’t look cheap at first glance, trading at 44 times earnings. But sales and earnings are growing so fast that this high multiple should look like a bargain. Based on estimates for next year, the stock is trading at 33 times earnings—just a small premium to the market.

You’ll have to be patient with this pick, but Nu should prove to be one of the best growth stocks on the market over the next few years.

Is it worth investing $1000 in Visa now?

Before you buy Visa stock, consider the following:

This Motley Fool Stock Advisor a team of analysts have just identified what they believe is Top 10 Stocks for investors to buy now… and Visa wasn’t one of them. The 10 stocks that made the cut could deliver monster gains in the years to come.

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Ryan Vanzo has no position in any stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway and Visa. The Motley Fool recommends Nu Holdings. The Motley Fool has a disclosure policy.