3 Stocks Preferred By Warren Buffett - PayPal

1-PayPal

Buffett's favorite stock types are often insurance companies. Berkshire is the investor behind GEICO, as well as many other insurance companies. Buffett sees insurance as a timeless industry and is an investor who thinks people will always need protection for unfortunate events. He also loves how his insurance business model allows him to sit back and take advantage of free money to collect and reinvest premiums. While PayPal (NASDAQ: PYPL) is not an insurance company, it embodies many of the features Buffett loves in the insurance business model.

PayPal is a leading company in digital payments!

Simplifying end-to-end transactions through applications such as Venmo, the company provides payment solution services for businesses to easily collect and manage transactions. The company, of course, benefits from a variety of competitive advantages through its well-known brand name and 377 million active accounts, in which it has a first mover advantage. Like credit card companies, PayPal makes money by charging a per transaction fee, and this has proven to be a highly lucrative business. PayPal generated $ 4.2 billion of net income, or a 19.5 percent profit margin, from $ 21.5 billion in revenue in 2020. (This shows the type of wider margins that are indicative of competitive advantage.)

PayPal continues to grow rapidly and increased its revenue by 20.7 percent last year!

ARK Invest owns $ 335 million worth of PayPal shares in the Next Generation ARK Internet ETF (NYSEMKT: ARKG) and under ARK Fintech Innovation (NYSEMKT: ARKF). There are many reasons for Buffett, who already has Mastercard and Visa investments, to admire PayPal.   3 Stocks Preferred By Warren Buffett - PayPal Source: https://www.fool.com/ You may also be interested in: 2 Technology Stocks Preferred By Gigantic Asset Managers: Shopify