Many investors will turn to Warren Buffett and his long-term track record of success when choosing which companies and stocks to invest in
Warren Buffett has had one of the best careers in history as a long-term buy and hold equity investor. Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B) has posted some of the most incredible returns since inception. Thus, the company’s investment portfolio is scrutinized by everyone, from seasoned veterans to beginner retail investors.
Berkshire’s holdings include a wide swath of companies in varying sectors. This means picking which stocks are best for any individual investor really depends on their market outlook and risk profile.
There aren’t too many stocks I’d disagree with Warren Buffett on. Here are three of the companies I’m definitely on the same page with, and think are table-pounders right now.
Apple (AAPL)
Apple (NASDAQ:AAPL) is among Buffett’s most profitable investments, even though he started accumulating shares approximately seven years ago. Known for the company’s iPhones, Apple has a burgeoning business which has resulted in incredible revenue and earnings growth over time from multiple divisions.
Apple stock has seen revenue growth really accelerate in its services division. Apple Pay, Apple Music, Apple TV+, and Apple Fitness+ are among the solutions available to meet the varied demands of its consumers. The expansion opportunities are encouraging and show growth potential if the company continues searching for cutting-edge techniques to satisfy its consumers.
Apple’s share price, which fell by more than 25% in 2022, has experienced an incredible comeback, soaring by 27% this year. The iPhone dominates the US smartphone industry, and has resulted in a surging stock price, which has greatly benefited Warren Buffett. The company’s future remains bright, with one of the most loyal customer bases and strongest moats of any of the mega-cap tech companies out there.
Investors in AAPL appear to be paying closer attention to the company’s services division — a significantly higher growth rates than the company’s core iPhone business. While Apple’s smartphones generate the majority of its revenue and earnings, services and accessories are picking up steam faster and could account for greater share over time. That’s a great thing for those bullish on Apple’s overall margins. Warren Buffett appears to be content in his holdings, generally keeping his position intact (or increasing it) in recent years.
Occidental Petroleum (OXY)
Warren Buffett has recently increased his stake in Occidental Petroleum (NYSE:OXY), purchasing almost 5.8 million company shares in various transactions in early March. This recent purchase, valued at over $350 million, is the first time the “Oracle of Omaha” has increased his bet on the oil company since September, bringing Berkshire’s total ownership of Occidental to 200.2 million shares.
After having a remarkable year in 2022, with its share price more than doubling, OXY has fallen about 2.3% this year. Despite this decline, the energy company has secured its position among Berkshire’s top 10 holdings.
During a shareholder meeting in 2021, Buffett expressed his views on the fossil fuel debate, stating that he considers himself a realist and that those on either end of the debate are somewhat unreasonable. Buffett invests in various parts of the energy sector, from utilities to solar power.
In addition to owning a significant amount of Occidental’s common shares, Berkshire Hathaway also possesses $10 billion worth of Occidental preferred stock and holds warrants to purchase another $5 billion worth of common shares. These warrants were obtained as part of the financing agreement between the two companies, which supported Occidental’s acquisition of Anadarko in 2019.
Bank of America (BAC)
Buffett has retained his stance in Bank of America (NSYE:BAC) amid market volatility. Berkshire’s one billion shares of the bank are valued at approximately $28 billion, even after recent declines.
Buffett has supported Bank of America CEO Brian Moynihan and remains well in the green with the company’s current holdings of 1.03 billion shares, purchased at an average price of around $14 each. Berkshire’s last purchase of Bank of America was around $25 per share in August 2020, but if it were to buy more shares it could potentially lift bank stocks overall.
Bank of America performed well in 2022, average return of investment on 5.07%. However, the bank’s overall performance for the year was negative, with BAC declining approximately 25%.
Bank of America’s credit quality could be a bright spot for the company as its nonperforming loans ratio dropped while its net charge-off ratio increased in Q4. Though the metrics should be monitored in the first few quarters of 2023, the bank has successfully diversified its loan mix over the years which reduces its overall credit risk.
Furthermore, the share price is a good potential asset because of its low forward price-earnings ratio of 8.03-times and a consistent dividend yield of 3.1%, backed by a payout ratio of only 27.1%. Additionally, it is expected to manage well through 2023 and experience growth once the economy improves in 2024 or later.
On the date of publication, Chris MacDonald has a position in AAPL. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
