On May 4, value investing disciples trooped to Omaha, Nebraska, for Berkshire Hathaway’s (NYSE:BRK-A, NYSE:BRK-B) annual general meeting. Everyone was eager to hear what Warren Buffett had to say about the economy and Berkshire’s operations. The company’s vaunted equity portfolio is a north star for many value investors seeking the best Warren Buffett stocks to buy.
Investors always want to follow Buffett, one of the greatest value investors of our time. The Oracle of Omaha sticks to value investing principles, purchasing high-quality businesses for a reasonable price.
Due to his strict selection criteria, the portfolio comprises some of the best wide-moat businesses. Even better, Buffett states his holding period is forever. So, his picks are businesses with durable competitive advantages that can compound earnings over decades. Looking at the current portfolio, here are some of the best Warren Buffett stocks to buy.
Apple (AAPL)
Apple (NASDAQ:AAPL) is the largest holding in Berkshire’s equity portfolio, accounting for nearly 40% of holdings. That’s why the markets took note when Berkshire disclosed it trimmed its stake by 13%. However, Buffett quelled any fears about AAPL stock, saying it would continue to be Berkshire’s largest holding.
The iPhone maker suffered mixed fortunes in recent quarters. Although the company’s Services segment has been growing, product revenues are on the decline. As a result, total revenues declined in five of the last six quarters.
That said, the market is forward-looking. That is why the stock rallied over 6% on May 3 after Apple posted its results for the second quarter of fiscal 2024. Despite the revenue decline of 4.3% from a year ago, the market took positives from management commentary that iPhone revenues could begin growing again. Particularly encouraging was the rebound in China; CEO Tim Cook stated that he was very optimistic about the Chinese market in the long term.
However, artificial intelligence is the main catalyst that makes Apple one of the best Buffett stocks to buy. Management teased its AI rollout and investors are predicting a huge announcement at the Worldwide Developers Conference in June. For now, Apple is still a cash-generating machine and a $110 billion stock buyback will provide a floor on the stock.
Berkshire owns 789.6 million shares of AAPL stock, with its overall stake valued at $143.9 billion.
Coca-Cola (KO)
In terms of returns, Coca-Cola (NYSE:KO) has been one of the best investments Buffett has made. The soft drink giant retained its moat and earned impressive returns on equity since Buffett started buying in 1988. Still, it’s among the best Buffett stocks to buy. Berkshire currently holds 400 million shares of KO stock, a stake valued at $25.1 billion and 7% of Berkshire’s total portfolio.
Scanning the equity landscape, few companies have the brand strength of Coca-Cola. It sells 1.9 billion servings each day of its popular drinks in more than 200 countries. It is the most valuable soft drink brand, giving it immense pricing power. Additionally, its global scale provides a significant cost advantage against competition.
Indeed, Q1 2024 results proved that Coca-Cola’s brand strength remains intact. The results showed that it increased prices by 13% but still grew unit case volumes by 1%. This highlights that it can raise prices without pushback from consumers.
Due to its significant profitability, Coca-Cola is also a Dividend Aristocrat—an S&P 500 company that increased its dividend for 25 consecutive years. KO recorded 61 consecutive years of dividend growth, making it one of the best Warren Buffett stocks to buy for dividends.
As of this writing, KO stock trades for 21 times forward earnings. Quench your portfolio thirst and earn a 3.1% dividend yield.
American Express (AXP)
As one of the oldest portfolio holdings, American Express (NYSE:AXP) deserves a mention due to its durability. The credit card company has been a mainstay in Buffett’s portfolio since the 1960s. Over the years, the business grew tremendously due to the shift from cards to cash.
The move to cards is still ongoing and that’s why AXP stock is one of the best Warren Buffett stocks to buy. According to recent results, the company isn’t resting on its laurels and is executing flawlessly. On April 19, it reported first-quarter revenues increased by 11% from a year ago to $15.8 billion. What’s more, diluted EPS increased from $2.40 to $3.33, an increase of 39%.
Management noted that it saw a high engagement level among premium customers. It expects the earnings momentum to continue as the company adds more members and spending increases in their high credit-quality cohort. In line with this view, they issued 2024 guidance of 9% to 11% revenue growth and EPS of $12.65 to $13.15.
The guidance means that AXP is trading at a forward price-to-earnings ratio of 18 times. Over the long term, the bet on millennials and Gen Z presents a significant growth runway. Furthermore, with only a 6% market share in its top five international markets, there is plenty of expansion upside.
Berkshire owns 151.6 million shares of AXP stock, or just more than 20% of the company’s total shares. The stake is valued at $37.5 billion and makes up nearly 10% of Berkshire’s total portfolio.
On the date of publication, Charles Munyi did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
