Warren Buffett reportedly manages about 90% of companies Berkshire Hathawayof (NYSE: BRK.A)(NYSE: BRK.B) equities portfolio, while backups Todd Combs and Ted Weschler handle the rest. The firm did not disclose which investment manager made each trade, but Buffett was almost certainly responsible for large positions, such as apple(NASDAQ:AAPL).
Although Buffett once called Apple the “best company” in the world, he sold 100 million shares in the third quarter, reducing Berkshire’s holdings by 25%. Although Apple remained the company’s largest holding as of September 30, Buffett has sold more than 615 million shares in the past four quarters.
Meanwhile, Berkshire is Domino’s Pizza(NYSE:DPZ) In the third season. The stock has gained 3,100% since its initial public offering (IPO) in July 2004, but has underperformed recently. Although the share price has fallen 21% in the past three years S&P 500 Index It rose 28% during the period.
Here’s what investors should know about Apple and Domino’s.
Apple has built brand authority and pricing power through engineering expertise. Its line of consumer electronics products are built on proprietary software that creates a seamless user experience across devices that consumers are willing to pay for. The average iPhone price in the third quarter was three times the average price of Samsung smartphones.
Apple has a strong presence in multiple consumer electronics markets, including its leadership in smartphones as measured by sales. In recent years, however, the company has expanded its focus beyond hardware. Proximity services such as App Store downloads, iCloud storage and Apple Pay allow the company to more effectively monetize its installed base of more than 2.2 billion active devices.
Apple reported modest financial results for the fourth quarter of fiscal 2024, which ended in September 2024. Meanwhile, non-GAAP (adjusted) earnings grew 12% to $1.64 per diluted share.
Apple is a solid business, but even the best ones aren’t worth buying at any price. In the absence of any meaningful catalysts, Apple’s price-to-earnings (P/E) ratio rose from 26 in April to 42 in December. Of course, it recently launched Apple Intelligence, a suite of artificial intelligence features for new iPhones and MacBooks. But it has yet to trigger the upgrade cycle many analysts predict.
The current price-to-earnings ratio looks particularly expensive because Wall Street expects Apple’s profits to grow at 10% annually over the next three years. In my opinion, this makes the stock significantly overvalued at its current price, and I think Warren Buffett made the right decision to sell shares. But some Wall Street analysts may disagree. Wedbush’s Dan Ives says Apple could become a $5 trillion company within 18 months.
Domino’s is the world’s largest pizza company in terms of sales and number of stores. According to statistics, the company serves 1 in 3 pizzas in the United States wall street journal. Regular promotions and a recently relaunched loyalty program have helped Domino’s build a reputation for delivering more value than its peers Papa John’s International and Pizza Hut (by Um! brand).
As a result, Domino’s has been more likely to report same-store sales growth in recent years. In fact, the company has posted seven consecutive quarters of same-store sales growth, despite some difficult macroeconomic conditions caused by high inflation and rising interest rates, which have left consumers particularly picky. By comparison, Papa John’s and Pizza Hut have reported same-store sales declines in four of the last seven quarters.
Domino’s’ third-quarter results were mixed. Revenue grew 5% to $1 billion, missing Wall Street expectations for 7% growth. However, GAAP diluted net income per share was flat at $4.19, beating analysts’ expectations for a 13% decline. The company opened a net 72 stores in the third quarter, bringing its total number of stores to more than 21,000.
Chief Executive Russell Weiner told analysts on a third-quarter earnings call: “I continue to believe we will achieve U.S. same-store sales growth of 3% or higher annually. That’s why I expect Domino’s to continue to drive additional market share.” share growth. The company also reiterated its guidance of “operating revenue growth of approximately 8% annually” by 2028.
To that end, Wall Street expects Domino’s profits to grow 8% annually over the next few years. Company guidance and Wall Street’s outlook may be conservative given that Domino’s expects international sales to rebound in 2026, but the stock is still expensive at 26.6 times earnings. I think investors should wait for a better entry point.
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Trevor Jennewine has no position in any of the stocks mentioned. The Motley Fool owns and recommends Apple, Berkshire Hathaway, and Domino’s Pizza. The Motley Fool has a disclosure policy.
Warren Buffett sells Apple stock, buys a restaurant stock, shares up 3,100% since its IPO
