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John Ballard (Toast): Toast is a leading restaurant management software provider that has consistently delivered high double-digit revenue growth, and the stock just recently broke out to new highs. With Wall Street starting to give the stock its due reward, investors could be looking at excellent returns over the next few years.

Toast continues to see strong momentum for its offering. The total number of locations using its product grew 29% year over year in the second quarter, bringing the total to 120,000. This drove a similar increase in gross payment volume and revenue, and importantly, the company is starting to see growing net income.

Toast is beating its competition in the restaurant software market with its easy-to-use platform and ability to innovate with new solutions. Its tools help restaurants save time managing payroll, marketing, and preparing orders. It’s why the number of restaurants using the platform has doubled since 2021.

Toast is in the early innings of growth, and its stock still trades at an attractive valuation. Shares fetch a price-to-sales ratio of 3.8, which is on the low side for a software business. Wall Street may continue to bid the shares up to a higher valuation if the company continues to surprise to the upside with higher margins.

Jeremy Bowman (Deckers Outdoor): It might not be a household name, but Deckers Outdoor is one of the best-performing stocks in the apparel industry over the last five years.

Shares are up nearly 600% in the last five years, driven by the breakout growth of Hoka, the popular running shoe brand, and the continuing success of Ugg, its trademark sheepskin boot.

Deckers’ strength was on display in its recent fiscal Q2 earnings report. Revenue jumped 20% to $1.31 billion, and earnings per share jumped 39% as its margin expanded.

The Hoka brand continues to grow rapidly with revenue up 35%, accelerating from the previous quarter to $570.9 million. However, Ugg is still its largest brand. It continues to deliver solid growth as well, with sales up 13% to $689.9 million in the quarter.

In addition to the consistently strong top-line growth, Deckers’ margins are also impressive. It posted a gross margin of 55.9% in the quarter, up from 53.4%. That’s well ahead of industry leader Nike and on par with high-end brands like Lululemon Athletica and On Holding, even though Deckers is much more reliant on the wholesale channel than those two brands.

Its operating margin of 23% over the last four quarters matches that of Lululemon and easily beats both Nike and On.

Deckers looks well-priced for its growth rate at a price-to-earnings ratio of 30, and considering its success with both Hoka and Ugg, the company has the potential to add a third breakout brand to its portfolio in the future. Expect Deckers to continue to outperform in the coming years.

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Jennifer Saibil has no position in any of the stocks mentioned. Jeremy Bowman has positions in Nike and Target. John Ballard has positions in Toast. The Motley Fool has positions in and recommends Lululemon Athletica, Nike, Target, Toast, and e.l.f. Beauty. The Motley Fool recommends On Holding. The Motley Fool has a disclosure policy.

3 Hypergrowth Stocks That Could Make You a Ton of Money was originally published by The Motley Fool

Seifert said Berkshire has long benefited from its diversification but suffered “multi-pronged” weakness in the quarter.

This included a 19% revenue decline at the Pilot truck stop chain, where fuel prices and marketing volumes fell. Berkshire also said “almost all” of its retail businesses, including its more than 80 car dealerships, are seeing revenue declines.

Net income totaled $26.25 billion, compared with a year-earlier $12.77 billion loss, reflecting unrealized gains and losses in stock investments such as Apple.

This adds volatility to net results that Buffett urges investors to ignore, and instead focus on operating performance.

HELENE, MILTON

Profit from insurance underwriting fell 69%, dented by losses from older policies, $565 million from Helene, and a bankruptcy settlement tied to a defunct talc supplier. This more than offset a 93% jump in Geico’s underwriting profit.

Shanahan called the policy losses a “big surprise,” while Seifert said many of Berkshire’s peers have already addressed similar issues. “This stands out by making Berkshire appear to be a laggard,” she said.

Berkshire also projected $1.3 billion to $1.5 billion of pre-tax losses in the fourth quarter from Hurricane Milton, which slammed into Florida in October.

Investment income at Berkshire’s insurance businesses, which hold much of Berkshire’s cash, rose 48% to $3.66 billion.

Such gains should decline if the Federal Reserve continues lowering interest rates, or Buffett finds something big worth buying.

Buffett “wants to invest every penny he can in businesses that provide Berkshire an advantage. But at the same time he’s willing to do nothing,” said Tom Russo, a principal at Gardner Russo & Quinn in Lancaster, Pennsylvania, who has invested in Berkshire since 1982.

“He’ll be there ready and loaded when other investors are despairing or capital-constrained,” Russo added.

Berkshire’s operations also include many industrial and manufacturing companies, a big real estate brokerage, and retail businesses such as Dairy Queen and Fruit of the Loom.

On Oct. 31, Berkshire finished purchasing the 8% of Berkshire Hathaway Energy it did not already own.

Buffett, 94, has led Berkshire since 1965. He is expected to eventually transfer leadership to Vice Chairman Greg Abel, 62.

(Reporting by Jonathan Stempel in New York; Editing by Ira Iosebashvili, Jason Neely, Daniel Wallis and Diane Craft)