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Berkshire Hathaway Inc. (BRK.B), headquartered in Omaha, Nebraska, is a holding company that owns subsidiaries in a variety of business sectors like insurance, freight, rail, transportation, and utility. With a market cap of $1 trillion, Berkshire's other operations include a railway company, a specialty chemical company, and an international association of diversified businesses.
Companies worth $200 billion or more are generally described as “mega-cap stocks,” and BRK.B definitely fits that description, with its market cap exceeding this threshold, reflecting its substantial size, influence, and dominance in the insurance-diversified industry. Berkshire is well-positioned for strategic acquisitions, like its recent purchase of Pilot, and has opportunities for global expansion into emerging markets.
Despite its notable strengths, Berkshire slipped marginally from its 52-week high of $476.95, achieved on Aug. 30 – marking its all-time high. Over the past three months, BRK.B stock gained 16.5%, outperforming the Financial Select Sector SPDR Fund’s (XLF) 11.5% gains during the same time frame.
In the longer term, shares of Berkshire rose 33.4% on a YTD basis and climbed 32.8% over the past 52 weeks, outperforming XLF’s YTD gains of 21.7% and 32.6% returns over the last year.
To confirm the bullish trend, Berkshire has traded above its 50-day moving average since early July, with slight fluctuations recently. It has been mostly trading over its 200-day moving average for the past year.
Berkshire's success can be linked to its recent addition to the $1 trillion market cap club driven by its emphasis on insurance operations, which generate cash reserves to pay out claims. Additionally, the company has acquired businesses with consistent cash flows, including railroads, utilities, retail, and confectionery, providing ample funds for further investments by Warren Buffett.
On Aug. 3, BRK.B reported its Q2 results, and its shares closed down more than 3% in the following trading session. Its EPS came in at $14.08, down 14.8% year over year. The company’s EPS declined 39.1% year over year to $19.96.
In the competitive arena of finance, JPMorgan Chase & Co. (JPM) has taken the lead over Berkshire, showing resilience with a 51.9% uptick over the past 52 weeks. However, BRK.B stock outperformed JPM’s solid 31.1% gain on a YTD basis.
Wall Street analysts are moderately bullish on Berkshire’s prospects. The stock has a consensus “Moderate Buy” rating from the five analysts covering it, and the mean price target of $477 suggests a marginal potential upside from current price levels.
On the date of publication, Neha Panjwani did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
