Warren Buffett is one of the most influential investors of all time. His holding company, Berkshire Hathaway (BRK.A), has gained 38.9% over the past year, outperforming the broader S&P 500 index’s 31.6% returns. Also, BRK.A’s 23.9% gains year-to-date compare with S&P 500’s 18.5% returns.
The investment company has made a solid comeback, wiping out all of its pandemic-driven losses to hit a record high in the second quarter of 2021.
Buffett’s strategy of holding stocks as long-term plays has generated immense profits, as evidenced by BRK.A’s latest 13F filing. And we think two of his top holdings AbbVie Inc. (ABBV) and Marsh & McLennan Companies, Inc. (MMC), are poised to continue advancing.
AbbVie Inc. (ABBV)
ABBV is a North Chicago, Ill.-based research-based biopharmaceutical company. The company researches and develops, manufactures, commercializes, and sells medicines and therapies. Warren Buffett invested more than $1.8 billion in ABBV stocks in the third quarter of 2020.
On July 27, ABBV and Calico Life Sciences announced an extension of their collaboration to discover, develop, and market new therapies for patients with age-related diseases, including neurodegeneration and cancer. This collaboration should enable the company to strengthen its position in the oncology and immuno-oncology space and enhance its transformative research capacity.
On July 21, ABBV announced that the U.S. Food and Drug Administration (FDA) granted a Breakthrough Therapy Designation (BTD) to venetoclax (VENCLEXTA®) for the treatment of patients with high-risk myelodysplastic syndrome (MDS). This demonstrates the company’s dominance in the industry.
ABBV’s net revenues increased 33.9% year-over-year to $13.96 billion in its fiscal second quarter, ended June 30. Its operating earnings grew 490.6% from the year-ago value to $4.44 billion. ABBV’s net earnings came in at $766 million, indicating a 203.8% rise year-over-year. The company’s adjusted EPS increased 32.9% year-over-year to $3.11.
The Street expects ABBV’s revenues to rise 11.3% year-over-year to $14.33 billion in the current quarter, ending September 2021. The $3.17 consensus EPS estimate for the current quarter indicates a 12.1% improvement year-over-year. In addition, ABBV surpassed the consensus EPS estimates in each of the trailing four quarters.
Over the past year, ABBV gained 23% to close yesterday’s trading session at $116.48. In addition, the stock has gained 11.5% over the past six months.
The company has an overall A rating, which translates to Strong Buy in our POWR Ratings system. The POWR Ratings are calculated considering 118 distinct factors, with each factor weighted to an optimal degree.
In addition, ABBV has a B grade for Growth, Value, Sentiment, and Quality. Among the 216 stocks in the Medical – Pharmaceuticals industry, ABBV is ranked #9. To see additional POWR Ratings for Stability and Momentum, click here.
Note that ABBV is one of the few stocks handpicked by our Chief Growth Strategist, Jaimini Desai, currently in the POWR Growth portfolio. Learn more here.
Click here to checkout our Healthcare Sector Report for 2021
Marsh & McLennan Companies, Inc. (MMC)
MMC is a professional services company providing advice and solutions to clients worldwide. The New York City company operates in two segments: Risk and Insurance Services; and Consulting. As of December 31, Buffett held a $499 million stake in the professional services company MMC.
On July 14, MMC declared a 15% increase in its quarterly dividend from $0.465 to $0.535 per share, which was to be paid on August 13, 2021.
MMC’s revenue increased 19.8% year-over-year to $5.02 billion in the fiscal second quarter, ended June 30. Its operating income stood at $1.23 billion, up 38.8% from the same period last year. Its net income increased 43.4% from its year-ago value to $820 million. The company’s EPS increased 42.9% year-over-year to $1.60.
The $4.43 billion consensus revenue estimate for its fiscal third quarter, ending September 2021, indicates a 15.5% increase year-over-year. The Street expects the company’s EPS to rise 19.5% from the prior-year quarter to $0.98 in the current quarter. MMC has an impressive earnings surprise history as well; it beat the consensus EPS estimates in each of the trailing four quarters.
MMC gained 34.4% over the past six months to close yesterday’s trading session at $151.64. The stock has gained 29.6% year-to-date.
It is no surprise that MMC has an overall B rating, which equates to Buy in our proprietary POWR Ratings system. MMC also has a B grade for Growth, Stability, Sentiment, and Quality. In addition, it is ranked #2 among the 14 stocks in the Insurance - Brokers industry. Click here to view additional MMC ratings for Momentum and Value.
ABBV shares fell $0.01 (-0.01%) in after-hours trading Monday. Year-to-date, ABBV has gained 14.42%, versus a 20.33% rise in the benchmark S&P 500 index during the same period.
About the Author: Subhasree Kar
Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a Master’s degree in Economics, she gained knowledge of equity research and portfolio management at Finlatics.
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