Warren Buffett, the Oracle of Omaha, is at it again. He’s proved he knows how to spot a great opportunity when he sees one. In his latest move, Buffett’s Berkshire Hathaway invested heavily in two surprising yet strategic companies. What are they? None other than Domino’s Pizza and Pool Corp.
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According to a recent filing with the Securities and Exchange Commission, reported by TheStreet, Berkshire snapped up 1.28 million shares of Domino’s, which were valued at $550 million as of the end of the third quarter. The holding company also bought over 400,000 shares of Pool Corp., the largest distributor of swimming pool equipment and supplies in the U.S.
Both companies’ shares jumped on the news as investors followed Buffett’s lead. Domino’s stock has risen 8.5% year-to-date and 20% over the past year. Pool Corp., though down 9% year-to-date, has seen a modest 3.5% annual increase.
Buffett has long extolled the value of brands as economic moats. That means they defend a company’s market position from competitors. “A strong brand is potent stuff,” Buffett famously said. Domino’s and Pool Corp. both exemplify this.
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Domino’s has built an empire around its efficient delivery model and recognizable branding. It’s the largest pizza chain in the U.S. for a reason. Despite missing revenue expectations in its third-quarter earnings, the company beat Wall Street’s forecasts for profitability and continues to show resilience. Analysts, such as those at Loop Capital, recently upgraded the stock. They see signs of accelerating same-store sales.
Pool Corp., on the other hand, benefits from its dominant market share in a niche yet essential industry. Even as discretionary spending on pool construction dips, the company continues seeing high demand for maintenance products, which drives its consistent revenues. Oppenheimer recently raised its price target for Pool Corp. after its quarterly earnings beat estimates.
“He doesn’t invest – take a swing of the bat – unless the opportunity appears unbelievably good,” Microsoft cofounder Bill Gates said of Buffett. These investments align perfectly with that approach. Domino’s and Pool Corp. demonstrate lasting appeal and consistent demand, which are key elements in Berkshire’s portfolio strategy.
