Although it’s been a rough decade for Warren Buffett’s Berkshire Hathaway (NYSE:BRK.B), 2022 may be the company’s comeback year as value stocks have rebounded in recent months. Berkshire has even outperformed stock market favorites like Ark Invest’s flagship ETF, the Ark Innovation ETF (NYSE:ARKK). There’s a reason Buffett just bought billions of dollars worth of his own stock.
Berkshire’s year in 2022
Source – TradingView
Berkshire Hathaway exhibits some astonishing strengths in the cold, hard light of day that follows a speculative craze in tech stocks. The company had $149 billion in cash and short-term investments at the end of the third quarter of 2021.
This was up from $144 billion on June 30, 2021, despite Berkshire buying back $7.6 billion in shares that quarter. And With a reasonable book value of approximately 1.5, you can anticipate Berkshire to keep buying back shares at present levels.
Berkshire Hathaway closed at $305.22 by the end of the trading day on Friday; this was down 1.86% from the previous trading day. The move was narrower than the S&P 500’s 1.89% daily drop.
Meanwhile, the Dow Jones Industrial Average fell 1.3%, while the NASDAQ, a tech-heavy index, fell 0.17%.
In terms of valuation, Berkshire Hathaway is currently trading at a Forward P/E ratio of 24.74. This valuation marks a premium compared to its industry’s average Forward P/E of 13.5. The company is also expected to report EPS of $2.79, up 29.77% from the prior-year quarter.
These positive estimates reflect optimism about the company’s business and profitability. And this is why many analysts believe that Berkshire stock will boom in 2022.
Summary
Berkshire Hathaway – and value stocks in general – could appreciate by 25% in 2022. Berkshire Hathaway is already one-third of the way there, with an increase of 8% in 2022. And it’s only the fourth week of the year.
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