For those new to conventional or online stock trading or any kind of investing, it does help to look at successful investors and the stocks in their portfolio.
The “Oracle of Omaha” Warren Buffett is a celebrity investor like no other. And that celebrity status comes with decades of success, making the veteran one of the most successful investors of all time. So it’s worth going through the stocks in Buffett’s portfolio and spot the intelligent ones in there. Some of them could be appropriate for you to consider as well.
If you’ve closely observed Berkshire Hathaway’s treatment of energy stocks in the past few years, you’d have found it to be kind of contrary to the philosophy of “buy and hold” that Buffett famously adheres to. Energy stocks have been bought and sold at a faster rate than usual by Buffett. But Phillips 66 (NYSE: PSX) isn’t among those. This stock has remained consistently in the Berkshire Hathaway portfolio.
Buffett has surely seen something here, and that probably is the fact that in spite of being in the oil & gas sector it hasn’t quite been affected by the volatility of oil prices. That’s because Phillips 66 is an oil refiner and a petrochemical producer. That helps it get a cut on the difference in price between crude oil, which is the raw product, and diesel, gasoline and plastics, which are the refined products. While these price margins can also experience some deal of volatility, they do not go through long spells of low prices like the oil industry has experienced many a time.
Phillips 66 has also been able to buy back over 15% of all outstanding shares after it spun off from ConocoPhillips a little more than four years ago. It has also managed to triple its dividend payment. As a result it isn’t the least expensive out there, but at 2.25 times price to tangible book value and 11.3 times PE ratio, it still is quite a reasonable price for the kind of business this is.
In terms of a long term investment, General Motors (NYSE: GM) could be worth considering, of which Berkshire Hathaway owns 50 million shares. While Brexit adds uncertainty all over Europe and a stock market weakness could hurt domestic deliveries here in the US as well, GM has China to focus on for escaping a significant amount of global uncertainty. China is the largest auto market in the world and its GDP is continuing to grow more than 6% annually. Its rising middle-class population is hungry for moving up in life and owning luxuries such as automobiles. GM has been doing particularly well there through joint-ventures. In May 2016, deliveries for Buick were up 61% while deliveries for the Baojun 560 SUV rose 80% from the previous year. SUVs are known to offer greater margins than sedans. In May, GM also delivered a record 295,282 vehicles.
Right now GM has quite a cheap valuation as well as a 5.1% yield. It is only trading lesser than five times its profits estimated for 2016 and 2017, and only thrice its 2017 projected cash flow per share. As we said above, this could prove to be a great long term option.
Successful and experienced investors can give you ideas for successful moves. For online trading though, you also need technology to ensure smooth and quick trades. TradeZero provides the advanced software and direct market access for quick trades. If you’d like to know how this works, please contact us at +1 954-944-3885. You can also email us at firstname.lastname@example.org.
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