It’s not every day you see Warren Buffett and his flagship investment firm Berkshire Hathaway (BRKB) take a stake in the initial public offering of an up and coming tech company.
In fact, Buffett told CNBC last year that… “In 54 years, I don’t think Berkshire has ever bought a new issue. The idea of saying the best place in the world I could put my money is something where all the selling incentives are there, commissions are higher, the animal spirits are rising, that that’s going to better than 1,000 other things I could buy where there is no similar enthusiasm … just doesn’t make any sense.”
I guess times change.
When the cloud-based data-warehousing company Snowflake plans on going public under the ticker SNOW next week, Berkshire will be at the front of the line, snapping up shares. It’ll be joined by Salesforce.com’s (CRM) venture arm in buying $250 million worth of Snowflake stock. Berkshire will also buy an additional $320 million worth of shares, bringing its total investment in the company to $570 million.
The two Wall Street giants obviously see the explosive investing potential in cloud and data storage services right now, and I agree. In fact, I currently have several cloud plays in my Platinum Growth Club Model Portfolio – all of which boast superior fundamentals.
Snowflake is looking to raise $2.2 billion on a valuation of $12.4 billion, making this potentially one of the largest IPOs of the year.
The company’s cloud data platform allows customers to consolidate data siloed elsewhere into a single stream. It also streamlines how various teams share data internally and externally, making collaboration easy without having to copy data and move it from place to place. The idea is to improve computing and storage efficiency, thereby saving time and money for enterprises.
It’s been a winning formula for the company, which has seen incredible revenue growth of late. Snowflake grew sales 150% during the fiscal year that ended January 31, 2020. More recently, revenue climbed 132.7% over the year that ended July 31.
Margins have also been soaring at Snowflake. The company reported margins of 61.6% for the six months that ended July 31, 2020, up from a rate of 49.4% for the same six-month period a year prior.
To be clear, I don’t recommend IPOs. Personally, I like to wait and see if a company can perform well as a public business and have a chance to prove its fundamental superiority.
And that’s just the case with several of my recommendations in the sector right now.
One company in my Breakthrough Stocks Buy List provides cloud-based software solutions and data analytics to industry-specific businesses is up over 252%. Revenue climbed over 27% in the second quarter from a year ago, while earnings crushed analysts’ expectations by a whopping 312%. Wall Street expects earnings for this winner are on track to rise 53.9% in the third quarter.
Another recommendation in my Accelerated Profits Buy List is a major cloud services provider in Asia and is up about 85% since my initial recommendation in March. For the second quarter, its earnings climbed 52.6%, year-over-year, beating analysts’ estimates by 33.7%, while revenue grew 28.7%. Wall Street predicts earnings will grow 32.7%, year-over-year, in the third quarter and revenue will rise 29.8%.
The reality is businesses across the board are coming to rely on the cloud, and the timing is just right for my stocks.
Looking forward, I expect all my stocks to benefit even further from quarter-end window dressing as major portfolio managers make their portfolios “pretty” by shoring up on fundamentally superior stocks. It’s why I’m looking for the institutional buying pressure to drive my Platinum Growth Club stocks higher.
Finding the Best Stocks
There’s a lot to be excited about as we enter into a seasonally strong time of the year for the market. So if you’re still not sure where to invest before the quarter-end window dressing and ETF realignments commence, then I suggest you take a look at my exclusive Platinum Growth Club Model Portfolio.
I’ve been preparing for September’s second-half strength with a host of new recommendations. I’ve added six new buys in Growth Investor, four in Breakthrough Stocks, 11 in Accelerated Profits (including two new stocks on Wednesday), and five recommendations in Platinum Growth Club.
But I’m just getting revved up.
I’m spotting more fundamentally superior opportunities as I write this, and I expect to add new companies to my Buy Lists so my subscribers are ready to go for the third-quarter earnings season. In fact, I will be releasing at least two new buys in my Accelerated Profits service next week.
As a Platinum Growth Club subscriber, you have access to every single stock – I have over 100 stocks across all my services! If you’re interested, you can sign up here. And the timing couldn’t be better.
That’s because I’m hosting my exclusive September Live Chat Event next Monday – just for my Platinum Growth Club subscribers.
This is a must-see event that you don’t want to miss. I will be discussing my current market outlook, the recent tech stock rotation, catalysts to propel my Platinum Growth Club Model Portfolio stocks higher and the third-quarter earnings season. I will also take time at the end of this event to answer subscriber questions.
If you sign up today, you can send me your questions and I’ll address them live during the event. I will also be hosting a special Q&A for my Elite Platinum Growth Club subscribers next Thursday, so I encourage you to join now so you can send me your questions early! I look forward to hearing from you.
Note: The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, does not own the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below.