Warren Buffett, one of the greatest investors of all time, has amassed a substantial fortune. He’s gained most of his fame through long-term investments as CEO of Berkshire Hathaway (NYSE:BRK-B). His successful investment philosophy focuses on long-term stakes in excellent businesses. This has led many investors to wonder about Warren Buffett’s favorite stocks
As Berkshire Hathaway’s CEO and chairman, Buffett’s personal net worth surpasses $100 billion, ranking him among the world’s wealthiest. His stock portfolio draws considerable attention, with investors of all levels viewing his trades as influential. Many see Buffett’s buying or selling decisions as well-grounded and significant.
If you’re looking for Buffett-style stocks, consider these three enticing options.
Apple (AAPL)
Apple (NASDAQ:AAPL), the largest publicly traded company globally, boasts a market cap of $2.8 trillion. Its success stems from an innovative product lineup, including Mac computers and iPhones. The recent Worldwide Developers Conference (WWDC) showcased the company’s focus on machine learning advancements. This positions Apple to potentially hit a $3 trillion market cap soon.
Apple’s product portfolio is diverse, featuring popular items like the iPhone, Macbook, Apple Watch, and augmented reality headsets. While the success of the new AR headset remains uncertain, strong sales and brand loyalty keep pushing Apple’s stock price to record highs. The company’s success lies in its popular products and services, which dominate markets like smartphones, tablets, and smartwatches. Despite higher prices, Apple’s user-friendly design and quality have catapulted it to the top in these categories.
As Apple’s market capitalization nears $3 trillion, its commitment to regular product updates and extensive stock buybacks bolsters its ongoing success and investor appeal.
Chevron (CVX)
Buffett’s optimistic view on the oil industry is evident through his investments in companies like Chevron (NYSE:CVX). Chevron’s strong performance in the first quarter, with a profit of $6.7 billion, surpassed expectations and exceeded last year’s earnings. The company also demonstrated its commitment to shareholders by distributing $2.9 billion in dividends and repurchasing $3.75 billion worth of shares, resulting in a generous 31% payout ratio. As part of its $75 billion grand strategy, Chevron plans to continue its buyback program with a $4.375 billion repurchase in the second quarter. These factors combine to help make the business one of Warren Buffett’s favorite stocks.
The oil industry’s previous strong performance has weakened as crude oil prices dropped from a peak of $122 to around $72 a barrel. This decline has impacted oil companies, including Chevron, whose stock has decreased by 10% this year. Adjusting to the lower crude prices, Chevron and other oil giants are managing their shareholders’ expectations. Warren Buffett, a respected investor, has also reduced his stake in Chevron by 20% after actively buying shares in the company last year.
Chevron stands out among dividend-paying energy stocks in the oil industry due to its consistent commitment to rewarding shareholders. With 36 consecutive years of dividend increases, the company has demonstrated its dedication. If Chevron maintains its dividend of $1.51 per share in the remaining quarters of 2023, it will have achieved a compound annual growth rate of approximately 4.5% since 2013.
Coca Cola (KO)
Coca-Cola’s (NYSE:KO) stock is currently oversold, presenting a potential buying opportunity. Despite challenges in soda consumption, the company has diversified its product portfolio with water, tea, juice, and sports drinks. With a history of 61 years of dividend payouts, Coca-Cola remains a favorite stock of Warren Buffett.
As people return to the drudgery of the nine-to-five grind, they’ll need a pick-me-up. For that, it’s difficult to beat the value proposition underlining Coca-Cola. Thus, KO appears a solid case for safe stocks for recession. Indeed, if a downturn materializes, people will likely be desperate to keep their jobs. And that means showing up to the office every day if necessary.
As the work routine resumes, Coca-Cola is poised to benefit as a go-to choice for an energy boost. It is considered a safe stock option during a recession, as people strive to maintain their jobs and productivity. While its financials may not be exceptional, Coca-Cola’s profitability stands out with a net margin surpassing most competitors. Its high-quality enterprise is reflected in an impressive return on equity (ROE) of 41%. Analysts view Coca-Cola favorably, with a strong consensus buy rating and an average price target indicating a potential 15% upside.
On the date of publication, Chris MacDonald has a position in BRK-B, AAPL, KO. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
