Berkshire Hathaway (NYSE:BRK.A, NYSE:BRK.B), founded by legendary investor, Warren Buffett is in my opinion one of the most resilient stocks in the market. Like many companies this year, Berkshire Hathaway stock saw its fair share of volatility as the markets tumbled. Nevertheless, the company helmed by Buffett himself has managed to produce strong returns.
This makes Berkshire Hathaway stock an investment worth keeping.
Berkshire’s main line of business is in insurance with operations in the railroad, retail and manufacturing sectors. But the company’s big bets in the stock market have also translated to high returns over the years.
Berkshire’s dominant presence in various companies essentially means that its performance is a reflection of the broader economy.
Given that the company is a powerful force in the market, this stock is a safe bet in these volatile times.
An Impressive Q2 For Berkshire Hathaway Stock
Berkshire Hathaway released its second-quarter earnings on Aug. 8 and the results were impressive despite the weak economy. The company reported net earnings of $26.3 billion along with $15.7 billion in equity sales. This in addition to the company’s compounded annual return rate of 20.3% over the last 55 years.
The Q2 report was a strong rebound from its first-quarter when the corona-economy dented Berkshire’s profits. In an effort to regain its position in the market, the company resorted to selling its stock in various companies. Berkshire sold its holdings in airline stocks and Goldman Sachs (NYSE:GS) prior to earnings. It also amped up the stock buyback program, adding $5.1 billion of its stock back to the portfolio.
Berkshire’s Buffett is known for his tactical investments and the company holds a good amount of cash to tide it over the next few years. With a sturdy business and a strong bottom line, I think BRK stock is a buy and hold forever-type of stock.
A Diverse Business Model
In addition to its strong earnings this past quarter, it’s also worth considering the durability of Berkshire’s business model. The company owns various companies across different industries. This includes insurance, clothing, electricity and jewelry to name a few. Industries such as these experience demand regardless of the state of the economy.
In addition to this, the company also holds a substantial stake in companies like Apple (NASDAQ:AAPL), Coca-Cola (NYSE:KO), American Express (NYSE:AXP) and Kraft Heinz (NYSE:KHC). These legacy giants have a strong bottom line and will continue to thrive in the future. With a portfolio of companies that are stalwarts in its sector, there’s no denying the safety net Berkshire Hathaway stock provides.
As reported by Yahoo Finance, Black Bear Value Partners listed Berkshire stock as one of its top picks for Q3. The company states that despite purchasing $5.11 billion in stock, Berkshire holds a strong cash position of $140 billion. It’s the stock price is also quite reasonable given its high valuation.
I concur with this sentiment. BRK.B stock is currently trading at just $210 and has a market capitalization of over $500 billion. Given the wide range of assets under its belt, the stock is a steal at this price.
The company also functions as a long-term stock. Buffett has claimed that his favorite holding period is “forever.” He has also said that investors should only consider buying Berkshire stock if they can hold it for more than five years. This essentially means that the stock is designed to derive value over time and is not a short-term profit generator.
The Bottom Line On Berkshire Hathaway Stock
Berkshire is a sturdy business and will likely remain one for many years. Backed by super-investor Buffett, the company owns a slice in some of the top names in various industries. As these businesses grow, they will only amplify returns for investors.
Many consider BRK stock to lean towards a more conservative investment. That is a stock which is fairly immune to volatility in the markets. In my opinion, that makes Berkshire Hathaway stock a good buy now more than ever. In a period where the future of many industries remains fairly uncertain, a stake in the company’s stock can provide some much-needed stability.
On the date of publication, Divya Premkumar did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.
Divya Premkumar has a finance degree from the University of Houston, Texas. She is a financial writer and analyst who has written stories on various financial topics from investing to personal finance. Divya has been writing for InvestorPlace since 2020.