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1 Stock To Buy, 1 To Dump When Markets Open: Berkshire Hathaway, Alibaba

1 Stock To Buy, 1 To Dump When Markets Open: Berkshire Hathaway, Alibaba

Stocks on Wall Street ended higher on Friday, with the benchmark S&P 500 and the blue-chip Dow Jones Industrial Average rising to new records after a stronger-than-expected jobs report fueled investor risk appetite.

This week we’ll have another batch of notable earnings reports from companies like Walt Disney (NYSE:DIS), Coinbase Global (NASDAQ:COIN), Palantir Technologies (NYSE:PLTR), and AMC Entertainment (NYSE:AMC), as well as important economic data, including the latest U.S. inflation reports, making the coming week a busy one.

Whatever the impact the latest set of earnings releases and U.S. CPIs may have on the market, below we highlight one stock likely to be in demand in the coming days and another which could see fresh losses. 

Remember though, our timeframe is just for the week ahead.

Stock To Buy: Birkshire Hathaway

Berkshire Hathaway (NYSE:BRKb), the holding company run by legendary CEO Warren Buffett, will be in focus this week, as investors react to its latest financial results, which were released over the weekend.

Berkshire said on Saturday that operating earnings jumped 21% in the second quarter to $6.69 billion—from $5.51 billion in the challenging year-ago period—as the economic reopening helped spark a recovery in its railroad, utilities, and energy businesses. Revenue jumped 22% year-over-year to $69.1 billion, easily surpassing expectations for sales of $64.6 billion.

Berkshire’s cash pile stood at $144.1 billion as of the end of the second quarter, still near a record despite the company’s massive stock buyback program. The conglomerate repurchased $6.0 billion of its own shares in the period, bringing the total through the first six months of 2021 to $12.6 billion. Berkshire bought a record $24.7 billion of its own stock last year.

In a notable development, Buffett, who turns 91 later this month, revealed that if he were to step down, Berkshire’s next chief executive would be Greg Abel, a vice chairman currently overseeing Berkshire’s non-insurance businesses.

1 Stock To Buy, 1 To Dump When Markets Open: Berkshire Hathaway, Alibaba
BRKb Daily Chart

Berkshire’s stock has outperformed the broader market this year, with Class A shares (NYSE:BRKa) and Class B shares climbing 24% and 23.2% respectively. The benchmark S&P 500 is up 18% over the same timeframe.

BRKb stock ended Friday’s session at $285.63, within sight of its all-time peak of $295.08 reached on May 10, earning the Omaha, Nebraska-based conglomerate a valuation of $653.3 billion.

Stock To Dump: Alibaba

Shares of Alibaba Group Holdings Ltd ADR (NYSE:BABA) are expected to suffer another challenging week after the Chinese e-commerce giant said on Sunday that it was cooperating with a police investigation into sexual assault allegations made by a female employee.

Police in the city of Jinan confirmed they were investigating the incident after the woman’s account went viral late on Saturday and sparked a social media frenzy on China’s Twitter-like microblogging website Weibo.

According to the woman, she was sexually assaulted by her boss and a client while on a business trip late last month. Upon returning on Aug. 2, she reported the alleged sexual misconduct to human resources and upper management, asking for her boss to be fired.

While human resources initially agreed, ultimately, they did not follow through, she claimed. The negative backlash prompted Alibaba CEO Daniel Zhang to apologize for the company’s poor handling of the matter.

Alibaba vowed to provide more detailed updates on the case as it continues to work with law enforcement officials on the investigation, the company said. 

1 Stock To Buy, 1 To Dump When Markets Open: Berkshire Hathaway, Alibaba
BABA Daily Chart

BABA stock—which has fallen roughly 16% year-to-date—closed at $196.39 on Friday, not far from a recent 16-month low of $179.71 touched on July 27. At current levels, the Hangzhou, China-based tech giant has a market cap of $533.8 billion.

Taking the latest batch of negative news into consideration, BABA shares look set to remain on the defensive as the company continues to face tough challenges ahead.


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