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2 Warren Buffett stocks to buy today

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Warren Buffett is widely regarded as the greatest stock market investor of all time. So I like to keep an eye what the super-investor is up to.

Earlier in the week, I took a look at Buffett’s current portfolio. Today, I’m going to highlight two of his  stocks I’d be happy to buy for my own portfolio today.

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This Buffett stock is a powerhouse

One Buffett stock that strikes me as a good long-term buy-and-hold for my portfolio is Amazon (NASDAQ: AMZN). I’m bullish on Amazon for a couple of reasons.

Firstly, I’m excited about its potential in the e-commerce space. In the fourth quarter of 2020, it generated online sales of $66.5bn, plus $27.3bn in sales from third-party sellers. These figures were up 46% and 57% year-on-year respectively.

Secondly, I’m excited about its potential in cloud computing. In the most recent quarter, sales here rose 28% to $12.7bn. The company advised that throughout the quarter it landed cloud deals with top companies across a number of major industries including JP Morgan in financial services, Zalando in e-commerce, and ARM in technology.

In terms of risks, one that stands out to me is the stock’s high valuation. Analysts forecast earnings of $46.8 per share this year, which means the forward-looking P/E ratio is a high 70. If Amazon’s future performance is disappointing, its share price could pull back significantly. It’s also worth noting that Jeff Bezos has just stepped down as CEO. This is another risk to consider.

Overall, however, I see considerable long-term investment appeal here. In the years ahead, I expect Amazon to get much bigger.

A reopening play?

Another Buffett stock I like the look of right now is Mastercard (NYSE:MA). I see the major player in the credit card industry as a good play on the electronic payments theme. By 2030, around 2.7trn transactions globally are expected to move from cash to credit cards and e-payments, according to research from Accenture.

Mastercard has grown at a very impressive rate in recent years as the world has moved away from cash payments. Between FY2015 and FY2019, revenue surged from $9.7bn to $16.8bn. Revenue last year was a bit softer ($15.3bn) but this was due to the fact travel spending was down significantly as the coronavirus pandemic surged globally.

I expect ‘cross-border’ payments to rebound in the years ahead as lockdowns are eased and the travel industry picks up. It’s worth noting that Wall Street analysts expect revenue of $18.1bn this year.

This is another Buffett stock that isn’t cheap. Analysts expect the company to generate earnings per share of $8.06 which puts the stocks on a forward-looking P/E of about 41. So there’s some valuation risk here as well.

Another risk to consider is the dynamic nature of the payments industry. Credit card companies now face competition from other types of digital payments companies such as PayPal (even though they have a partnership), and possibly even cryptocurrencies. Mastercard will need to continue to innovate.

All things considered however, I believe the long-term growth story here remains compelling. I’d buy this Buffett stock for my portfolio today.

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Edward Sheldon owns shares in Amazon, Mastercard, and PayPal. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK owns shares of and has recommended Amazon, Mastercard, and PayPal Holdings and recommends the following options: long January 2022 $1920 calls on Amazon, short January 2022 $1940 calls on Amazon, and long January 2022 $75 calls on PayPal Holdings. 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.

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