Investors with available funds may find it beneficial to consider the stock market for long-term wealth growth. Few understand this method better than Warren Buffett, the renowned investor who transformed Berkshire Hathaway from a modest holding company into a $1.1 trillion equity giant. Shares in Berkshire Hathaway and the Chinese electric vehicle (EV) manufacturer BYD are currently considered good investment options.
Since its inception in 2003 in Shenzhen, China, BYD has capitalized on China’s industrial growth, initially as a battery and electronics manufacturer before focusing on electric vehicles. Warren Buffett began acquiring shares in BYD in 2008, and now possesses $2.5 billion in BYD equity, making up about 1% of Berkshire’s entire portfolio. The appeal of BYD is its substantial economic moat, characterized by its vertical integration, as the company produces its own batteries on a large scale, allowing it to offer cost advantages to consumers. Beyond competitive pricing, BYD is becoming a leader in technology. In March, the company revealed a new technology that can charge an EV in just five minutes, offering a range of up to 249 miles. This development, if mass-produced, could narrow the convenience gap between electric and gasoline-powered vehicles.
BYD’s financial prospects appear favorable. With a forward price-to-earnings (P/E) ratio of 19.5, its shares are significantly less expensive than those of competitor Tesla, which has a forward P/E of 84. BYD also reported a remarkable 73% increase in fourth-quarter profits to $2.1 billion.
On the other hand, some investors might prefer investing in Berkshire Hathaway’s portfolio for broad exposure to various industries, leveraging Warren Buffett’s comprehensive strategy and market insights. Buffett famously encouraged belief in America’s economic potential, even during challenging times. This confidence is reflected in Berkshire’s significant investments in major U.S. companies such as Apple, Coca-Cola, and American Express. Historically, Berkshire Hathaway has consistently surpassed the performance of the S&P 500.
Berkshire Hathaway’s advantage may stem from its adaptive strategies in the face of shifting macroeconomic situations. In 2024, the company raised eyebrows by selling stocks and refraining from reinvestment, ending the year with $334.2 billion in cash. This strategy was possibly a response to anticipated market fluctuations triggered by tariff concerns, positioning Berkshire to acquire high-quality stocks at lower prices.
While Berkshire Hathaway may not replicate its past rapid growth due to its size, it remains capable of maintaining market-leading performance. Investors interested in high growth should consider BYD due to its potential to expand globally in the EV market. Meanwhile, Berkshire Hathaway offers a solid choice for those seeking stability, with its performance more likely to align with the average S&P 500 returns.
