Warren Buffett is considered the greatest investor in history. The Oracle of Omaha has had a proven track record of investing in companies that continue to deliver for their shareholders. This is why Buffett is worth over $78 billion, putting him on the list for the world’s wealthiest people. If you’re confused about where to park your capital, look no further than the top Warren Buffett stocks.
However, not all stocks owned by Berkshire Hathaway (NYSE: BRK.A,NYSE: BRK.B) are attractive. Therefore, it is imperative to look for those who have a stamp of approval from Buffett himself.
For Buffett, the criteria revolve around investing in companies with a proven track record of innovation and the ability to adjust to its environment. The ultimate goal is to search for companies that provide stable returns for several years.
As a result, the compound annual growth rate (CAGR) of Berkshire Hathaway by the conclusion of 2019 exceeded 2,744,062%.
Warren Buffett Stocks to Buy: Coca-Cola (KO)
Drinks maker Coca-Cola took a fair bit of punishment in the first half of the year, with Coca-Cola dropping 15% of its value. Since then, it is clawing back to its 52-week high share price of roughly $60. With a five-year annualized return of 6%, Coca-Cola stock continues to be one of the top Warren Buffett stocks.
The company recently reported its better-than-expected third-quarter results. At-home, consumption channels effectively offset many of the losses from away-from-home segments due to the coronavirus. Non-GAAP earnings per share were at 55 cents, which came in 9 cents ahead of expectations.
Similarly, revenues of $8.7 billion beat estimates by approximately $330 million. Moreover, the organic revenue decline was 6%, which was better than estimates of an 8.5% drop.
Coca-Cola announced several strategic initiatives, which aim to drive margins higher. It intends to discontinue up to 200 underperforming brands and focus on those who drive the most value. The management believes that its belt-tightening measures and portfolio optimization will boost its efficiency and operating margins.
Bank of America (BAC)
Bank of America is the second-largest U.S. bank in assets with a leading presence across the country. It is at the top of the heap in consumer deposits and second in small-business lending and retail mortgages.
It continues to have a strong moat with its diversified business segments, despite the challenges to the banking sector. With BAC stock’s relative undervaluation, Berkshire Hathaway scooped up $2.1 billion of BAC stock in August.
The pandemic has weighed in on BAC’s recent third-quarter results. EPS was at 51 cents, which dropped 9% year-over-year. However, it improved on a sequential basis by 38%. Additionally, revenues were at $20.3 billion, representing an 11% drop compared to the same period last year.
On a more positive note, average consumer deposits reached $861 billion, representing a healthy 20% increase since the end of 2019. BAC’s digital engagement also grew immensely with a record number of logins on its platforms.
With the reduced stresses on the banking sector in the upcoming quarters, expect BAC stock to bounce back sharply. It also boasts a healthy 3% yield, which is amongst the best in the sector. The current price presents an excellent buying opportunity before BAC stock returns to winning ways.
Costco (COST)
Costco operates 795 of its membership warehouses globally, many of which have been affected by the pandemic. However, the company has done exceedingly well in dampening despite the challenges posed by the pandemic.
Moreover, COST stock has also done remarkably well as its six-month return relative to the S&P 500 is 21.1%.
It recently reported its stellar fourth-quarter results where revenues and net income rose 12% and 27%, respectively. Customers began hoarding goods in anticipation of the lockdown during the initial phase of the pandemic. Costco’s warehouse model played right in the hands of consumers looking to hoard and minimize trips.
Additionally, the company upped its e-commerce game, with its online sales doubling year-over-year in May. It also reported a 101% increase in online sales in August as well. The company has a strong customer base, that rewards the company with high-margin membership fees and frequent visits to its stores. Therefore, it’s tough to see Costco slowing down anytime soon.
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article.
