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Warren Buffett's 5 Most Spectacular Earnings Charts

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Fourth quarter earnings season is here. It’s being led off, as always, by the big banks.

And that means Warren Buffett will be paying attention because Berkshire Hathaway still has big positions in the banks, and other financials.

But among Berkshire’s 50 stock positions, there are several which stand out because they have fantastic earnings charts.

What that means is that they rarely miss on the estimate and the shares continue to rise.

These are known as earnings all-stars.

Earnings All-Stars are Rare

It’s not easy to beat every quarter, or nearly every quarter, for years. There are only a couple dozen companies that have never missed in the last 5 years and one of those below hasn’t missed in 12 years.

Who does that?

It takes solid communication from management to the Street and execution in the business each quarter, even during a global pandemic, to pull it off.

There are a lot of moving parts in producing a good earnings surprise record. 

Yet these five companies are doing it as their shares hit new all-time highs.

Is having a good earnings surprise track record a requirement to be in Berkshire’s portfolio?

Or is it just a coincidence?

5 of Buffett’s Most Spectacular Earnings Charts

1.    Visa (V - Free Report) has the best earnings chart on the Street. Period. No other even comes close. It hasn’t missed since its 2008 IPO (gulp) and is up over 1100% since then. Berkshire bought it in the third quarter of 2011, so it has a big winner, but it’s a small position in the portfolio compared to his banks and Apple.

2.    Mastercard (MA - Free Report) also has an amazing earnings surprise track record but it has some misses. It went IPO in 2006 and has missed only 3 times in that 14 years. Impressive. Berkshire bought it before it bought Visa, in the first quarter of 2011. Shares are up over 7,000% since the IPO.

3.    Apple (AAPL - Free Report) is Berkshire’s largest position and now makes up 47% of the portfolio. Will he continue to trim the position to keep it from completely dominating? Apple has a great earnings surprise track record, and last missed back in 2016. That’s the year Berkshire bought it.

4.    StoneCo (STNE - Free Report) is the only one on this list which doesn’t have a pristine earnings record. It has beat just 2 out of the last 4 quarters but it’s up 100% over the past 6 months so it deserves to be included along with the others. This Brazilian digital payments and finance company went IPO in the fourth quarter of 2018 and that’s when Berkshire got in.

5.    RH (RH - Free Report) is a recent addition to the Berkshire portfolio. It was bought in the third quarter of 2019. But the pandemic really changed the game for the furniture retailers, as consumers focused their time, and money, on their home. RH shares are up 135% in the last year and are hitting all-time highs. It has a great earnings surprise track record, with only 2 misses since its 2012 IPO and both of those were in 2016.

[The author of this article owns shares of RH in her personal portfolio.]

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