Warren Buffett once said that Bitcoin (CRYPTO:BTC) was “probably rat poison squared.” As far as I know, he hasn’t publicly commented on Dogecoin (CRYPTO:DOGE), but I’m sure the legendary investor could provide a colorful description of the current cryptocurrency flavor of the month.
However, Buffett did explain his overall take on cryptocurrencies in a CNBC interview last year. He stated:
Cryptocurrencies basically have no value and they don’t produce anything. They don’t reproduce, they can’t mail you a check, they can’t do anything, and what you hope is that somebody else comes along and pays you more money for them later on, but then that person’s got the problem. In terms of value: zero.
With that view, every company that Buffett’s Berkshire Hathaway (NYSE:BRK.A) (NYSE:BRK.B) owns a stake in, including Berkshire itself, would be far superior to Dogecoin or any other cryptocurrency over the long term. Here are three Warren Buffett stocks, though, that should be especially better than Dogecoin.
Jefferies analyst Bren Thill recently predicted that Amazon.com (NASDAQ:AMZN) shares could jump 70% over the next three years. I know, that sounds like peanuts compared to Dogecoin’s year-to-date gain of more than 3,700%. However, if you subscribe to Buffett’s idea that cryptocurrencies have no intrinsic value, owning Amazon is a much more appealing proposition than owning Dogecoin.
Amazon provides one thing that Buffett cherishes — a strong moat. The company reigns as the 800-pound gorilla in e-commerce. It’s the leader in cloud hosting. Even if you’re a big fan of Dogecoin, you’d have to admit that its moat isn’t particularly strong. There are lots of other cryptocurrencies already available and potentially more on the way.
Putting the cryptocurrency comparisons aside for the moment, the main reason to buy Amazon is its growth prospects. Even with the rapid growth, e-commerce still only made up 14% of total retail sales in the fourth quarter of 2020. Amazon clearly has plenty of room to grow in its core market.
Of course, the company also has multiple other growth drivers. Its AWS cloud unit especially stands out. Amazon is expanding into the telehealth market this summer. The company also is catching up fast in the digital advertising market.
Buffett’s favorite stock (other than Berkshire Hathaway) is Apple (NASDAQ:AAPL). It’s by far the biggest holding in Berkshire’s portfolio. Last year, the Oracle of Omaha stated that Apple is “probably the best business I know in the world.”
That’s a stark contrast from Buffett’s opinion of cryptocurrencies. However, it’s easy to understand why the multibillionaire investor is such a fan of Apple. He likes businesses that produce something of value that customers want. And Apple definitely checks off that box.
Of the 10 best-selling smartphone models in January, Apple made six of them — including all of the top four. Rollouts of high-speed 5G networks continue to boost sales of the company’s iPhones. The more iPhones in use, the more Apple’s broader iPhone-centric ecosystem benefits.
Apple recently introduced several new products and services that should boost its growth, notably including its AirTag tracking device and Apple Podcasts Subscriptions. However, the real game-changers could be on the way over the next few years as the company launches augmented reality apps and devices.
Don’t think that Buffett is a dinosaur completely opposed to innovation in payment technology. If he was, Berkshire wouldn’t own a sizable stake in Mastercard (NYSE:MA).
Granted, Mastercard has been around a long time. However, it’s still a nimble financial giant. The company’s Engage platform allows its banking clients to provide fully digital payment options instead of using physical credit cards. Mastercard has also been busy acquiring innovative smaller companies.
As is the case for Amazon, increased e-commerce adoption is a key growth driver for Mastercard. Of course, the company also is poised to win as consumers shop more in brick-and-mortar stores as concerns about the COVID-19 pandemic ease.
You may or may not agree with Buffett about whether cryptocurrencies are a good investment. However, even if you love Dogecoin, buying and holding shares of Mastercard is a smart way to make money over the long run.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.