Warren Buffett is widely considered to be the best investor of all time. Over the past seven decades, he has created a conglomerate with nearly $1trn in assets and hundreds of thousands of employees worldwide.
A key component of his strategy is buying stakes in high-quality businesses. These can be public as well as private enterprises. Unfortunately, I cannot invest alongside the ‘Oracle of Omaha’ in his private businesses. However, I can invest alongside the billionaire in public stocks.
And there is one Buffett stock I would buy for my portfolio with £500 today.
A leading company
Not many companies in the UK are exposed to the fast-growing cloud computing industry. There are a handful of options, but many lack the size and scale to compete internationally.
On the other hand, New York-listed Snowflake (NYSE: SNOW) is rapidly becoming a global force to be reckoned with in the sector. The organisation features in Buffett’s portfolio. It is one of the few companies in the technology sector he has a vested interest in.
The enterprise offers a cloud platform for other businesses to help them manage and analyse their data. Cloud infrastructure spending grew 37% year-on-year in the last half of 2021, which highlights the opportunity in this market.
Nearly half of the Fortune 500 uses Snowflake’s services. And since its IPO in September 2020, the company has posted revenue growth rates at more than 100% every quarter.
Buffett-style growth opportunity
It seems as if the company can continue to register rapid growth rates in the years ahead. Management has projected that the total market for the group could stand somewhere in the region of $81bn.
Over the past 12 months, Snowflake’s revenues totalled just $1bn. Put another way, the business has the potential to grow exponentially over the next five to 10 years.
Of course, this growth is not guaranteed. The cloud computing market is highly competitive. Google controls around two-thirds of the market, and trying to wrest control away from this internet giant will be difficult. There is no guarantee that Snowflake will manage to expand its market share, especially as other corporations are also trying to grow.
Nevertheless, as the company develops its offering and expands its footprint, the risk of customers moving away to competitors will only decline. Cloud customers can be sticky as moving data to another service is costly and may potentially lead to data loss.
The bottom line
Considering its growth potential, I am excited about the outlook for Snowflake. Even though the stock looks expensive right now as the business is still losing money, I think its growth will justify its premium valuation over the next two or three years.
As such, why I would follow Buffett and buy the stock for my portfolio today as an international growth play.