3 Best-Performing Warren Buffett Stocks So Far in 2019: Are They Buys Now?

Keith Speights, The Motley Fool

Updated Sun, Apr 14, 2019, 7:00 AM

Warren Buffett has plenty to smile about so far in 2019. Unfortunately, Buffett's own Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B) isn't performing all that great, with shares basically flat year to date. However, Berkshire's biggest single holding, Apple, has delivered solid gains this year.

But the three best-performing Warren Buffett stocks are well ahead of Apple. StoneCo (NASDAQ: STNE), Liberty Latin America (NASDAQ: LILA), and Synchrony Financial (NYSE: SYF) have soared 40% or more so far this year. Here's why these Buffett stocks are such big winners -- and whether they're still smart picks for investors who aren't yet billionaires.

Image source: The Motley Fool.

1. StoneCo

Shares of StoneCo are up a whopping 91% year to date. The Brazil-based financial technology company has been firing on all cylinders in 2019.

After a dismal performance last year following its initial public offering, StoneCo got off to a good start right out of the gate in January. The company announced some encouraging preliminary fourth-quarter operational metrics. StoneCo's momentum continued in February, with investment firm Zack's Research bumping its rating on the stock from a hold to a buy.

The real catalyst for StoneCo, though, came in March, with the company's fourth-quarter update. StoneCo blew analysts' expectations out of the water with revenue of $137.6 million and earnings per share of $0.27. Not every fintech company can grow rapidly and still remain profitable. StoneCo has been able to do so and also achieve excellent customer satisfaction levels along the way.

2. Liberty Latin America

Another South American stock in Buffett's portfolio has also been a big winner in 2019. Liberty Latin America is up 44% so far this year.

The company is a leader in the Latin American telecommunications market, with operations in 20 countries. Liberty Latin America offers communications and entertainment services including digital video, broadband internet, and wireless phone services as well as information technology solutions such as data center hosting.

There were two primary factors behind Liberty Latin America's great year-to-date performance. Investors were pleased with the company's decision to abandon its talks with Millicom about a potential acquisition. The company also posted improvement in its fiscal 2018 results in February, with 2% year-over-year revenue growth and a lower operating loss than in the previous year.

3. Synchrony Financial

Synchrony Financial ranks as the No. 3 best-performing stock in Berkshire's holdings for 2019 thus far. Shares of the big financial services company have risen 41% year to date.

The company's primary business is issuing private-label store credit cards. Synchrony's customers include a long list of well-known companies including Amazon.com, Harbor Freight, QVC, and Walgreens.

Synchrony's excellent performance this year stemmed in part from its renewal of a key relationship with one big customer, Sam's Club. The company lost Sam's Club owner Walmart as a customer in 2018. Synchrony also reported solid Q4 results in January, with net interest income rising 11% year over year to $4.3 billion.

Are they buys?

It's hard to argue against Warren Buffett's stock picks, especially when they're performing really well. But I'm afraid that's what I'm going to have to do.

I'm not a big fan of Liberty Latin America. The company lost a boatload of money last year. Its stock is relatively expensive also, with shares trading at nearly 21 times expected earnings. Despite its strong performance so far this year, I don't think this stock is a great pick right now.

Technically, StoneCo wasn't a Buffett pick. The Wall Street Journal reported that Berkshire Hathaway portfolio manager Todd Combs chose StoneCo rather than Buffett. Of course, it's probably fair to say that Buffett wouldn't go along with Berkshire investing in a stock for which he was adamantly opposed.

Regardless of whether you consider StoneCo as a true Warren Buffett stock, I'm not sold on it at this point. It's very pricey, with a forward earnings multiple of 31.5. I like StoneCo's growth potential, but this is a stock I'd prefer to watch from the sidelines for now.

That leaves Synchrony Financial. On this Buffett stock, count me in. I like Synchrony's business model. And I especially like that the stock's risk level is lower thanks to the renewal of its relationship with Sam's Club. My hunch is that Synchrony Financial will continue to bring a smile to Warren Buffett's face for a long time to come.

More From The Motley Fool

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Keith Speights owns shares of Apple. The Motley Fool owns shares of and recommends Amazon, Apple, and Berkshire Hathaway (B shares). The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool has a disclosure policy.

Terms and Privacy Policy

Your Privacy Choices

Utah Privacy Notice

More Info