Recent financial analyses suggest that Berkshire Hathaway’s stock may witness significant gains in the near future. Ari Wald, the esteemed head of technical analysis at Oppenheimer, shared his insights during a appearance on CNBC’s “Power Lunch”, elucidating his bullish stance on the Warren Buffett-led conglomerate. Following a stellar earnings report, both class A and class B shares soared by approximately 4% on the Monday immediately after the announcement.
Wald specifically pointed out the remarkable performance of Berkshire’s fourth-quarter operating profit, which jumped a staggering 71%, amounting to $14.5 billion. This incredible surge begs the question of how the stock will progress moving forward, especially for everyday investors who can only access the more affordable class B shares priced around $500 each, notably more attainable than the A shares, which stand at an eye-popping price of $747,485. Wald emphasized that the recent upward movement represents a critical breakthrough, surpassing the previous peak of $485 that had stood since September. This statistical feat is indicative of a longer-term upward trajectory, leading Wald to confidently affirm that “higher highs” are within reach over the ensuing months.
In contrast, Wald is considerably more cautious regarding Domino’s Pizza, which experienced a decline of 1.5% following a lackluster fourth-quarter earnings and revenue report. Interestingly, Wald does not view this dip as an opportune moment for investment. He highlighted that Domino’s stock has been oscillating around its 200-day moving average for nearly a year, suggesting a lack of structural strength in the trajectory and performance of the stock. This is further compounded by the observations that the stock has been making progressively lower highs since 2020, leading Wald to express skepticism about its potential for recovery.
Given this landscape, Wald prefers Darden Restaurants—a company whose performance, he argues, reflects far more robust momentum. Darden, which operates well-known establishments such as Olive Garden, has shown positive growth of 4.4% this year, in contrast to the subdued performance of Domino’s, which has only grown by 8.6% year-to-date. The difference in trajectory bolsters Wald’s perspective on making prudent investment choices, favoring stocks with demonstrable upward momentum over those that fail to maintain positive trends.
Turning his attention to Constellation Energy, Wald highlighted that while high-momentum stocks have recently captured the market’s attention, they warrant a careful approach to trading. Despite the stock’s resilience and its 20% increase year-to-date, he stresses a strategic wait-and-see attitude amidst a backdrop of elevated volatility and market uncertainty.
Wald maintains Constellation on his large-cap buy list, suggesting that the company’s winning streak should be sustained. However, it is crucial for the stock to uphold its critical 200-day moving average benchmark of $235. This, according to Wald, is foundational to preserving its long-term uptrend. Notably, Constellation’s stock has had a remarkable surge of 91% in the preceding year, affirming its potential as a significant player in the energy sector.
As investors eagerly look for signals to guide their decisions, Wald’s insights provide a clear framework for evaluating the behavior of these stocks. The dichotomy between Berkshire Hathaway’s optimism, Domino’s cautious appeal, and the measured outlook on Constellation Energy points to the complexity of investing in today’s dynamic market environment. Ultimately, with careful consideration of performance trends and a strategic approach to stock selection, investors can position themselves for future gains while navigating the inherent risks of market fluctuations.