1 Warren Buffett stock I’d buy with £500 today

This Fool explains why he would follow Warren Buffett and buy this US growth stock, considering its potential in the years ahead.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Fans of Warren Buffett taking his photo

Image source: The Motley Fool

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Warren Buffett is widely considered to be the best investor of all time. Over the past seven decades, he has created a conglomerate with nearly $1trn in assets and hundreds of thousands of employees worldwide. 

A key component of his strategy is buying stakes in high-quality businesses. These can be public as well as private enterprises. Unfortunately, I cannot invest alongside the ‘Oracle of Omaha’ in his private businesses. However, I can invest alongside the billionaire in public stocks

And there is one Buffett stock I would buy for my portfolio with £500 today. 

A leading company 

Not many companies in the UK are exposed to the fast-growing cloud computing industry. There are a handful of options, but many lack the size and scale to compete internationally. 

On the other hand, New York-listed Snowflake (NYSE: SNOW) is rapidly becoming a global force to be reckoned with in the sector.  The organisation features in Buffett’s portfolio. It is one of the few companies in the technology sector he has a vested interest in. 

The enterprise offers a cloud platform for other businesses to help them manage and analyse their data. Cloud infrastructure spending grew 37% year-on-year in the last half of 2021, which highlights the opportunity in this market. 

Nearly half of the Fortune 500 uses Snowflake’s services. And since its IPO in September 2020, the company has posted revenue growth rates at more than 100% every quarter. 

Buffett-style growth opportunity

It seems as if the company can continue to register rapid growth rates in the years ahead. Management has projected that the total market for the group could stand somewhere in the region of $81bn.

Over the past 12 months, Snowflake’s revenues totalled just $1bn. Put another way, the business has the potential to grow exponentially over the next five to 10 years. 

Of course, this growth is not guaranteed. The cloud computing market is highly competitive. Google controls around two-thirds of the market, and trying to wrest control away from this internet giant will be difficult. There is no guarantee that Snowflake will manage to expand its market share, especially as other corporations are also trying to grow. 

Nevertheless, as the company develops its offering and expands its footprint, the risk of customers moving away to competitors will only decline. Cloud customers can be sticky as moving data to another service is costly and may potentially lead to data loss. 

The bottom line

Considering its growth potential, I am excited about the outlook for Snowflake. Even though the stock looks expensive right now as the business is still losing money, I think its growth will justify its premium valuation over the next two or three years. 

As such, why I would follow Buffett and buy the stock for my portfolio today as an international growth play. 

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

Here’s why Aston Martin’s one of the best-performing UK stocks today!

Several UK stocks pushed upwards on 24 July, and this iconic, British car manufacturer was among the best performers. Why…

Read more »

Investing Articles

Down 85%, but I’m backing this FTSE 250 stock to fly like the Rolls-Royce share price

The Rolls-Royce share price has flown to the stars and Harvey Jones thinks it's too late to buy. So he's…

Read more »

British flag, Big Ben, Houses of Parliament and British flag composition
Investing Articles

Is now the right time for me to buy revived FTSE national institution Marks and Spencer?

Marks and Spencer was once a revered FTSE 100 firm, but poor decisions led to its demotion in 2019. Now…

Read more »

Market Movers

Up 11% today, can this FTSE 250 stock finally get motoring?

Jon Smith explains why the Aston Martin share price has jumped this morning, but urges caution after he picks apart…

Read more »

Investing Articles

With £456m of net cash, FTSE 100 stock easyJet’s ready for take-off

Our writer's been positive on this FTSE 100 for some time, but these Q3 results and its growing cash pile…

Read more »

A senior woman sits up on the exam table at a doctors appointment. She is dressed casually in a blue sweater and has a smile on her face as she glances at the doctor. Her female doctor is wearing a white lab coat and seated in front of her as she takes notes on a tablet.
Investing Articles

Primary Health Properties: a FTSE 250 REIT with a 6% yield, a growing dividend, and a positive outlook

After its latest results show rental income growth, Stephen Wright's looking to buy a FTSE 250 REIT set to benefit…

Read more »

A pastel colored growing graph with rising rocket.
Investing Articles

How much passive income could I make for every £1,000 invested in Aviva shares?

Even a relatively small investment in Aviva shares could generate much greater passive income, particularly if the dividends are reinvested…

Read more »

Close-up of British bank notes
Investing Articles

I’m considering 100 shares in this FTSE 250 gem to aim for £300 a month in dividends

Mark Hartley outlines why a lesser-known banking stock from the FTSE 250's worth considering for an income portfolio in 2024.

Read more »