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Analyst Blog

On Mar 6, 2014, shares of Berkshire Hathaway Inc. (BRK.B) touched an all time high of $121.44. Shares gained nearly 17% in the 1-year period.

The momentum in this Zacks Rank #1 (Strong Buy) stock was driven by strong fourth-quarter and full year 2013 results.

Berkshire – a conglomerate housing more than 80 businesses – made a strong exit to the year 2013 by reporting fourth operating earnings of $1.53 per share which comfortably beat the Zacks Consensus Estimate of $1.40. Moreover, the company delivered positive earnings surprises in 3 of the last 4 quarters with an average beat of 20.4%. The long-term expected earnings growth rate for this stock is 7%.    

While Berkshire’s insurance company acts as the primary impetus driving its growth, the year saw a significant contribution from its railroad, utilities and energy business. The acquisition of railroad company, Burlington Northern Santa Fe Corp. in 2010 has brought in a major contributor to earnings.  

Berkshire's finance and financial product segment also performed well with mid-double-digit growth in pre-tax earning in the segment, primarily led by Clayton Homes. Lower loan loss provision and increased net interest income also helped the segment earnings.

Heading into 2014, the company’s economic sensitive businesses will see strong growth with the gradual build up of economy. Its energy business is expected to gain from the synergy from the recent acquisition of NV Energy.

Moreover, Warren Buffett’s unique skills have created tremendous value for shareholders. A strong capital position also allows the company to make acquisitions, for which it is well known.

Other stocks with the same Zacks Rank as Berkshire – Alleghany Corp. (Y - Snapshot Report), American Financial Group Inc. (AFG - Analyst Report) and Am Trust Financial Servcies, Inc. (AFSI - Snapshot Report) are worth considering.