Slam (US:SLAM) The Motley Fool·2024-09-03 09:06Core Insights - The article highlights three undervalued stocks in Warren Buffett's $318 billion investment portfolio, suggesting they are strong buying opportunities for investors [1][3][4]. Company Summaries Amazon - Amazon is recognized for its e-commerce dominance but has significant revenue streams from its cloud services (AWS), advertising, and subscription services [5][6][7]. - AWS accounted for one-third of global cloud infrastructure spending in the June quarter, with expectations of continued double-digit growth [7]. - Amazon's advertising services benefit from over 3 billion monthly visitors, allowing for strong pricing power [8]. - The company has over 200 million Prime subscribers, enhancing its pricing power through exclusive content deals [9]. - Amazon shares are currently priced at less than 12 times forecast cash flow for 2025, representing a 47% discount to its five-year average [10]. Mastercard - Mastercard is a global payment processing leader, facing cyclical concerns similar to Amazon, but has a favorable long-term growth outlook [11][12]. - The company avoids lending, focusing on payment facilitation, which allows it to recover faster from economic downturns [13]. - Mastercard is expanding into underbanked emerging markets, with cross-border payment volume growing by 17% year-over-year [14]. - Shares of Mastercard are available at 29 times forward earnings, a 14% discount to its five-year average, with expected annual EPS growth of 17% through 2028 [15]. Sirius XM Holdings - Sirius XM is a satellite radio operator that relies on the auto market for subscriber growth, facing potential headwinds from declining auto sales [16][17]. - The company operates as a legally licensed monopoly, providing strong subscription pricing power compared to traditional radio [18]. - Sirius XM generates about 77% of its net sales from subscriptions, making it less vulnerable to economic downturns than ad-reliant competitors [19][20]. - The upcoming merger with Liberty Media's tracking stock will create a single class of shares, potentially attracting more institutional investors [21]. - Sirius XM's forward P/E ratio is around 10, close to a 30-year low, and offers a 3.2% yield, making it an attractive buy [22].