mRaising cash for shareholders has been Warren Buffett’s position as CEO of. in blood Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) in 1965. During that time, he led Berkshire to average annual earnings of about 20%, which translates into total earnings, including performance of Class A shares (BRK.A) to date, of about 3,500,000%. Profits like these are why the investing world pays close attention to what the Oracle of Omaha is buying and selling.

Berkshire Hathaway has interests in 45 stocks, according to the most recent 13F filing with the Securities and Exchange Commission. Among those 45 positions, five Warren Buffett stocks stand out as screaming buys in December.

Warren Buffett, CEO of Berkshire Hathaway. Image source: The Motley Fool.

Amazon

While I am aware this won’t win points for originality, it will win the ecommerce queen Amazon (NASDAQ: AMZN) remains a surefire stock in Buffett’s portfolio.

Most people know Amazon for its dominant online marketplace. According to an August report by eMarketer, Amazon is expected to handle 41.4% of all US online sales in 2021. That is around 34 percentage points more than the closest competitor. The key, however, is that the company has signed up 200 million people for Prime membership worldwide. The annual fees charged by these members help achieve wafer-thin trading margins and enable Amazon to consistently undercut price for brick-and-mortar retailers.

The future of the company, however, lies in its significantly higher-margin segments, such as cloud infrastructure services. Amazon Web Services (AWS) accounted for only 13.4% of net revenue in the third quarter, but contributed 61.8% of the company’s operating income. Even if online sales slow as coronavirus vaccination rates rise and life returns to a semblance of normalcy, the critical high-margin segments of Amazon (AWS, subscriptions, and advertising) continue to grow rapidly.

If Amazon simply hit the median price-to-operating cash flow it has traded at over the past 11 years, we could have a company at $ 10,000 per share by the middle of the decade.

Image source: Getty Images.

Bristol Myers Squibb

Another Warren Buffett stock that quickly turned into a screaming buy is a pharmaceutical company Bristol Myers Squibb (NYSE: BMY).

Bristol Myers’ success depends on the organic development and growth of its branded pharmaceutical portfolio, as well as acquisitions to drive the needle higher.

From an internal development perspective, the company’s greatest successes include the cancer immunotherapy Opdivo and the oral anticoagulant Eliquis – the latter was also included. developed Pfizer. Eliquis was expected to generate $ 10 billion in sales for Bristol Myers this year, while Opdivo had sales of $ 7 billion last year. Opdivo is particularly fascinating because it has been studied in dozens of clinical studies and has already received approval for 10 indications in the United States.

Bristol Myers also caused a stir when it acquired cancer and immunology drug maker Celgene in November 2019. The acquisition of Celgene added a handful of blockbuster drugs to Bristol’s portfolio, including Revlimid for the treatment of multiple myeloma, which may exceed $ 13 billion in sales in 2021. Revlimid is protected from the onslaught of generic competition for another four years, which means Bristol Myers will generate ample cash flow in the meantime.

With only 7x consensus earnings per share for the future year, this is an absolute steal.

Image source: Getty Images.

Visa

The recent sell-off at the payment processing giant Visa (NYSE: V) also makes it a screaming buy.

Over the past few months, Wall Street and investors have had concerns about payment intermediaries such as square or cryptocurrencies that are eating away at Visa dominance. However, given the utter dominance of Visa in the processing space, these concerns seem unfounded. In 2018, it held a 53% share of the U.S. credit card network’s purchase volume, which was more than 30 percentage points higher than its closest competitor. I should also mention that the US is the leading consumer market in the world.

Visa outperformance is also a function of credit avoidance. By sticking to the processing side of the equation, the company avoids putting capital back to cover loan defaults during a recession. Having no credit / credit losses to cover is a big reason Visa recovers faster than other financial stocks and holds a profit margin in excess of 50%.

And did I mention that Visa is one of the smartest ways to play with rapidly rising inflation? Since the company’s fees are tied to the price of goods and services, sales and profits will increase as the prices of goods and services increase.

Image source: Getty Images.

Teva Pharmaceutical Industry

The cheapest stock in Warren Buffett’s portfolio, branded and generic companies Teva Pharmaceutical Industry (NYSE: TEVA), also wants to be bought. Teva can currently be purchased for just over three times the consensus earnings per share of Wall Street in 2021 and 2022.

Unlike Amazon, Bristol Myers, and Visa, Teva didn’t shoot all cylinders. Since 2016, the company has settled a bribery scandal, buried itself in debt after overpaying generic drug maker Actavis, and faced a mountain of legal disputes over its role in the opioid epidemic. But while there are reasons not to give Teva a review premium, a win multiplier of 3 is too pessimistic given the steps being taken to get the ship back upright.

At the end of 2017, Kare Schultz took over the management. He is a turnaround specialist who has taken clear steps to improve the business. During his tenure, net debt was reduced from over $ 34 billion to approximately $ 22 billion and annual operating costs were reduced by a double-digit percentage. Teva is leaner than ever and is able to maintain annual operating cash flow of $ 2 billion (or more).

Additionally, there is light at the end of the tunnel when it comes to opioid litigation. In California, a lawsuit was recently launched in favor of drug manufacturers, which could restore some bargaining power to Teva’s court. If Schultz can negotiate a national deal where free or discounted drugs, not cash, are the lure, Teva could likely double up very quickly.

Image source: Getty Images.

Bank of America

The last Warren Buffett stock to be hand-bought in December is a banking juggernaut Bank of America (NYSE: BAC).

Bank stocks like BofA are about to hit their growth sweet spot. As inflation picks up, the Federal Reserve will most likely have to act in 2022 or 2023 to raise rates. An increase in the key interest rate of the federal funds will increase the earnings potential of the net interest income of banks with outstanding floating rate loans.

None of the money market banks is more rate sensitive than Bank of America. The company’s earnings presentation for the third quarter indicates that shifting the yield curve 100 basis points in parallel over a 12 month period would generate an estimated $ 7.2 billion in additional net interest income. While it is unlikely that we will see a 100 basis point shift in 12 months, we are on the verge of seeing higher interest rates add significantly to BofA’s earnings potential.

The other impressive aspect of Warren Buffett’s second-largest holding is the digitization effort. While you probably don’t consider Bank of America a tech-savvy company, its digital active users has grown to nearly 41 million, with 43% of all revenue in the third quarter coming from online or mobile banking. This digitization push has allowed the company to consolidate some of its branches to cut costs.

Bank of America should be a breeze as it enters the sweet spot of its growth cycle.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Bank of America is an affiliate of The Ascent, a Motley Fool company.

Sean Williams owns stocks in Amazon, Bank of America, Square, and Teva Pharmaceutical Industries. The Motley Fool owns shares of and recommends Amazon, Berkshire Hathaway (B shares), Bristol Myers Squibb, Square, and Visa. The Motley Fool recommends the following options: long January 2022 $ 1,920 calls on Amazon, long January 2023 $ 200 calls on Berkshire Hathaway (B shares), short January 2022 $ 1,940 calls on Amazon, short January 2023 $ 200 puts on Berkshire Hathaway (B shares ), and January 2023 short calls of $ 265 on Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy.

The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.