Warren Buffett handily beat the S&P 500 in 2022, thanks in large part to strong performances from a couple of oil stocks in Berkshire Hathaway‘s (NYSE: BRK.A) (NYSE: BRK.B) portfolio. But analysts don’t expect those two oil stocks will have as much room to run this year.
If the analysts are right, Buffett will need help from other stocks to keep up his market-beating ways. He could be in luck, to some extent. Here are three Buffett stocks that could soar 33% to 80% in 2023, according to Wall Street.
Snowflake (NYSE: SNOW) stood among Buffett’s biggest losers last year. Shares of the cloud-based analytics software provider plunged nearly 58% in 2022. However, the consensus Wall Street price target for the stock reflects an upside potential of 33%.
Piper Sandler analyst Brent Bracelin recently lowered his price target for Snowflake and yet the stock still jumped. Why? Although Bracelin predicts slower growth for the cloud computing market in 2023, he thinks that Snowflake will grow faster than the overall market. Investors viewed his 3% downward revision to the price target for the stock as a positive in light of the context.
This relative optimism appears to be justified. Snowflake continues to deliver impressive revenue growth, despite facing tough macroeconomic headwinds. The company is even hiring, while many tech companies are downsizing.
Berkshire Hathaway’s stake in Snowflake is too small right now to move the needle very much, though. It’s doubtful that Buffett or his investment managers will significantly increase their position in light of Snowflake’s still-lofty valuation.
You can lump Amazon (NASDAQ: AMZN) into the category of Buffett’s big losers of 2022, as well. Shares of the e-commerce and cloud-hosting giant tanked nearly 50% last year.
But Amazon is off to a good start in 2023. Analysts think it could go much higher, with the consensus price target 42% above the current share price.
The optimism about Amazon extends beyond Wall Street. Famous (and highly successful) investor Bill Miller, head of Miller Value Partners, thinks that the stock is a no-brainer buy. He recently told CNBC that Amazon is “one of the easiest names in the market right now.” Miller believes that Amazon Web Services alone justifies the company’s current market cap.
Miller could be right. Amazon’s steep sell-off last year stemmed primarily from investors’ reaction to the company’s slowing growth. However, that sluggishness was due mainly to economic uncertainty. Amazon’s long-term prospects remain strong.
As is the case with Snowflake, Buffett won’t receive a tremendous benefit, even if Amazon stock skyrockets this year. The stock makes up only 0.3% of Berkshire’s portfolio. But it wouldn’t be shocking if investment managers Todd Combs and/or Ted Weschler convince Buffett to buy more shares of Amazon.
3. Nu Holdings
It’s kind of a same-song-different-verse story with Nu Holdings (NYSE: NU). The fintech stock plummeted nearly 57% last year. However, Wall Street has high expectations for Nu, with a price target reflecting an upside potential of around 80%.
Nu’s digital-banking platform serves over 70 million customers in Brazil, Colombia, and Mexico, and business is booming for the Latin American fintech leader. The company’s revenue skyrocketed 171% year over year to $1.3 billion in Q3 — an all-time high.
The recent political turmoil in Brazil shouldn’t impact Nu very much. Nu founder and CEO David Vélez noted in the company’s Q3 call that the company has grown throughout its history, despite seeing the biggest recession in Brazilian history in 2015 and 2016, a presidential impeachment, and both left-leaning and right-leaning political parties gaining power in the countries where it operates.
If Nu does soar this year, will it go a long way toward helping Buffett beat the market? Nope. Berkshire has a smaller position in Nu than it does in Amazon and Snowflake. While these three stocks could be big winners for Buffett in 2023, the legendary investor will still need help from other stocks that Berkshire owns.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Keith Speights has positions in Amazon.com and Berkshire Hathaway. The Motley Fool has positions in and recommends Amazon.com, Berkshire Hathaway, and Snowflake. The Motley Fool recommends the following options: long January 2023 $200 calls on Berkshire Hathaway, short January 2023 $200 puts on Berkshire Hathaway, and short January 2023 $265 calls on Berkshire Hathaway. The Motley Fool has a disclosure policy.