Warren Buffett’s Berkshire Hathaway recently made some notable stock purchases in the fourth quarter of 2024. The company bought more Constellation Brands, Pool Corp, and Domino’s Pizza shares. Constellation Brands, known for selling Corona and Modelo beer in the U.S., saw its shares fall after missing earnings estimates in January.
Berkshire bought the stock before this sell-off. The stock trades at a forward P/E of 13 and pays a 2.3% dividend yield. Despite potential headwinds, Constellation’s operating margins of over 30% show an economic moat.
Pool Corp, a distributor of pool products, faces a slowdown due to high mortgage rates impacting real estate. Sales and operating income were down in 2024. However, the company remains profitable and maintains its top industry position.
Management expects flat or slightly higher sales and EPS in 2025.
Berkshire invests in Domino’s Pizza
The stock trades at a 22% discount from recent highs with a forward P/E of 26.
Berkshire initially bought 1.28 million shares of Domino’s Pizza in Q3 2024 and increased the stake to 2.38 million shares in Q4. Domino’s has delivered a 5,300% return over the past 15 years. The company benefits from a strong brand and franchise model.
Despite challenges, Domino’s grew retail sales by 6% in 2024 and achieved a 90% return on capital employed. Domino’s global scale, with over 21,000 stores in 90 markets, solidifies its position. A recent dip brought the forward earnings multiple to 26, which seems fair given the company’s 19% annual earnings growth over the last decade.
While future returns may be more modest, Domino’s remains profitable and likely to continue delivering for shareholders. These purchases align with Buffett’s investment philosophy of buying proven winners with reliable business models and evident competitive advantages at attractive valuations. Investors can find encouragement in Berkshire’s moves, even during market downturns.
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