Warren Buffett has been one of the most closely watched investors in the last half-century. The “Oracle of Omaha" as he is referred to is known for having a simple, but highly effective investing strategy.
One of the core tenets of that philosophy is Buffett's discipline to take long-term positions in stocks. For investors that long-term focus allows them to tune out the noise that comes from the market's short-term volatility.
However, while Buffett is known for taking long-term positions, it doesn't mean that he doesn't buy and sell parts of his positions. Buffett makes his trades via Berkshire Hathaway Inc. (NYSE: BRK.A, BRK.B). In fact, investors see stocks being bought and sold by Berkshire as being a leading economic indicator.
In this special presentation, we're looking at seven stocks in Warren Buffett's portfolio. A common theme with each of these stocks is that they've been part of Buffett's holdings for many years and will likely continue long after Buffett, who is in his 90s, is no longer with us.
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- Apple
- Occidental Petroleum
- RH
- Mastercard
- Chubb
- Procter & Gamble
- AbbVie
#1 - Apple (NASDAQ:AAPL)
Apple Inc. (NASDAQ: AAPL) remains one of Berkshire Hathaway’s largest holdings. The company embodies many of what Buffett looks for in a long-term investment. Specifically, the company has a strong brand with a loyal customer base. Second, the company is a cash-generating machine. The company generates about $1 billion in cash every single day.
About 50% of that cash comes from iPhone sales. In September 2024, Apple launched its iPhone 16. This will be the first phone to include “Apple Intelligence” the company’s initial artificial intelligence (AI) offering. The bullish argument is that approximately 20% of iPhone owners haven’t upgraded their device in over three years. In recent years, the concern is that Apple’s new iPhones haven’t had a “wow” factor. But Apple Intelligence may spark an unprecedented upgrade cycle.
The Apple analyst forecasts on MarketBeat have a consensus forecast of $239.17 for AAPL stock. However, the price targets have been moving higher in September, with Dan Ives from Wedbush being among the most bullish with a $285 price target.
About Apple
Apple Inc designs, manufactures, and markets smartphones, personal computers, tablets, wearables, and accessories worldwide. The company offers iPhone, a line of smartphones; Mac, a line of personal computers; iPad, a line of multi-purpose tablets; and wearables, home, and accessories comprising AirPods, Apple TV, Apple Watch, Beats products, and HomePod.
Read More - Current Price
- $226.47
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 24 Buy Ratings, 10 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $239.17 (5.6% Upside)
#2 - Occidental Petroleum (NYSE:OXY)
Warren Buffett is heavily invested in the energy sector. Two of Berkshire’s biggest holdings are Chevron Corp. (NYSE: CVX) and Occidental Petroleum Inc. (NYSE: OXY). Both companies are well-managed and have solid balance sheets. But based on Buffett’s trading activity in the last 12 months, the nod goes to Occidental Petroleum.
The energy sector, and specifically oil stocks, are expected to move higher with lower interest rates in the United States. A lower cost of money is likely to stimulate business spending. And if that spending involves moving goods around the world, that means higher oil demand. Add in geopolitical uncertainty, and you can see why the market is about to see a spike in crude oil prices.
Berkshire Hathaway has made several purchases of OXY stock in the last 12 months. As of this writing, the stock is in what has been labeled the “Buffett buy zone” under $60 per share. Buffett may be content with Berkshire’s current position, which translates to a 29% stake in the company, but the company’s portfolio of assets, including those in the Permian Basin, puts it in prime position when oil prices move higher.
About Occidental Petroleum
Occidental Petroleum Corporation, together with its subsidiaries, engages in the acquisition, exploration, and development of oil and gas properties in the United States, the Middle East, and North Africa. It operates through three segments: Oil and Gas, Chemical, and Midstream and Marketing. The company's Oil and Gas segment explores for, develops, and produces oil and condensate, natural gas liquids (NGLs), and natural gas.
Read More - Current Price
- $52.24
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 6 Buy Ratings, 8 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $71.60 (37.1% Upside)
#3 - RH (NYSE:RH)
In 2023 and 2024, Buffett was buying some homebuilder stocks. But investors would have been well-advised to focus on Buffett’s holdings in RH (NYSE: RH). The company, formerly known as Restoration Hardware, is a premium home furnishings retailer.
The stock has moved up and down with the housing market. In 2021, investors were rewarded when RH stock charged above $700 per share. However, the stock plummeted, and short interest increased as higher mortgage rates caused the housing market to seize up.
RH stock has spiked 21% in the 30 days ending September 20, 2024. Most of that gain has come since the company’s earnings report on September 12, which came just a few days before the Fed’s decision on interest rates. The short squeeze has run the stock up to its 52-week high. However, analysts are beginning to bid the stock higher as the company’s investments, including expansion in Europe, are starting to pay off.
About RH
RH, together with its subsidiaries, operates as a retailer in the home furnishings market. The company offers products in various categories, including furniture, lighting, textiles, bathware, décor, outdoor and garden, baby, child, and teen furnishings. It provides its products through rh.com, rhbabyandchild.com, rhteen.com, rhmodern.com, and waterworks.com online channels, as well as operates RH Galleries, RH outlet stores, RH Guesthouse, and Waterworks showrooms in the United States, Canada, the United Kingdom, and Germany.
Read More - Current Price
- $345.53
- Consensus Rating
- Hold
- Ratings Breakdown
- 6 Buy Ratings, 8 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $322.54 (6.7% Downside)
#4 - Mastercard (NYSE:MA)
Another staple of Berkshire Hathaway’s portfolio comes from payment processing stocks. One reason for that is that these companies benefit from the network effect. Buffett owns shares of Visa Inc. (NYSE: V), American Express Co. (NYSE: AXP), and Mastercard (NYSE: MA). As is the case in the energy sector, you’ll be doing well with any of these picks, but in the short term, Mastercard may be the best choice.
One reason to believe in that is the company’s focus on preventing threats posed by AI. Privacy and security are becoming key issues for consumers. And the rise of AI is increasing the threats of fraudulent purchases, and subsequent chargebacks. In 2023, the cost of cybercrime was estimated to be over $8 trillion. Mastercard is helping to address these threats with its $2.65 billion acquisition of Recorded Future, the world’s largest threat intelligence firm.
As of September 24, 2024, MA stock trades at a forward P/E of 34.5x and near its 52-week high. That’s a premium valuation and may keep some investors away. But a 12-year streak of rising dividends and analysts increasing their price targets suggest a long runway for growth.
About Mastercard
Mastercard Incorporated, a technology company, provides transaction processing and other payment-related products and services in the United States and internationally. The company offers integrated products and value-added services for account holders, merchants, financial institutions, digital partners, businesses, governments, and other organizations, such as programs that enable issuers to provide consumers with credits to defer payments; payment products and solutions that allow its customers to access funds in deposit and other accounts; prepaid programs services; and commercial credit, debit, and prepaid payment products and solutions.
Read More - Current Price
- $497.14
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 23 Buy Ratings, 5 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $512.08 (3.0% Upside)
#5 - Chubb (NYSE:CB)
At a time when Buffett is making headlines for selling his position in certain stocks, it’s notable that he’s been buying shares of Chubb Ltd. (NYSE: CB). Buffett is well-versed in insurance companies and the world’s largest publicly traded property and casualty insurance company fits that expertise. With its latest purchases, Berkshire now owns about 6.7% of the company’s stock.
The latest readings of the consumer price index (CPI) and producer price index (PPI) show the rate of inflation is easing. But that’s deceptive because areas such as home and auto insurance are still showing year-over-year increases. In fact, many homeowners are feeling the pain of higher premiums.
CB stock has climbed nearly 10% since it reported earnings on July 29, 2024. That's pushed it near its 52-week high. However, analysts have been raising their price targets for the stock that still trades at an attractive 13.7x forward earnings. Plus, Chubb has another attribute that Buffett loves, a safe and growing dividend. In fact, the company has increased its dividend for 31 consecutive years.
About Chubb
Chubb Limited provides insurance and reinsurance products worldwide. The company's North America Commercial P&C Insurance segment offers commercial property, casualty, workers' compensation, package policies, risk management, financial lines, marine, construction, environmental, medical risk, cyber risk, surety, and casualty; and group accident and health insurance to large, middle market, and small commercial businesses.
Read More - Current Price
- $292.11
- Consensus Rating
- Hold
- Ratings Breakdown
- 9 Buy Ratings, 10 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $274.70 (6.0% Downside)
#6 - Procter & Gamble (NYSE:PG)
If you want to invest like Buffett, you’ll want to consider consumer staples stocks. From there, it's not hard to connect the dots to Procter & Gamble Co. (NYSE: PG), another Buffett favorite.
Procter & Gamble is a defensive stock that includes a portfolio of some of the best-known brands such as Tide, Crest, and Gillette. Not only does the company span many income levels, but it also reaches a wide demographic base.
The company’s revenue and earnings have continued to grow on a year-over-year basis, but the growth has been slowing. However, with consumers perhaps getting some relief from interest rates, investors will expect to see a reacceleration of this growth heading into 2025.
At 24.9x forward earnings, PG is fairly valued. However, over the last 10 years, PG stock has delivered a total return of 172.5%. That includes a dividend that has grown for 69 consecutive years and at an annualized rate of 6.69% over the last three years.
About Procter & Gamble
The Procter & Gamble Company provides branded consumer packaged goods worldwide. It operates through five segments: Beauty; Grooming; Health Care; Fabric & Home Care; and Baby, Feminine & Family Care. The Beauty segment offers conditioners, shampoos, styling aids, and treatments under the Head & Shoulders, Herbal Essences, Pantene, and Rejoice brands; and antiperspirants and deodorants, personal cleansing, and skin care products under the Olay, Old Spice, Safeguard, Secret, and SK-II brands.
Read More - Current Price
- $173.77
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 14 Buy Ratings, 6 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $176.00 (1.3% Upside)
#7 - AbbVie (NYSE:ABBV)
AbbVie Inc. (NYSE: ABBV) stock is up more than 24% in 2024. That’s been somewhat of a surprise because investors expected a downturn after the company’s flagship drug, Humira, began facing biosimilar competition in the United States.
Lower revenue from Humira is one reason that the company’s revenue is down about 6% in the last 12 months. However, the company is making good on its projection that it will make up much of that revenue with its Skyrizi and Rinvoq drugs. By 2027, AbbVie predicts that combination of drugs will contribute a combined $27 billion in revenue. That’s about 50% of the total revenue the company generated in fiscal year 2023.
Add to that the company’s diverse pipeline, a rock-solid balance sheet, and its status as a dividend king with 52 consecutive years of increasing its payout and you have all the ingredients of a stock that checks many of the boxes that investors like Warren Buffett find desirable.
About AbbVie
AbbVie Inc discovers, develops, manufactures, and sells pharmaceuticals worldwide. The company offers Humira, an injection for autoimmune and intestinal Behçet's diseases, and pyoderma gangrenosum; Skyrizi to treat moderate to severe plaque psoriasis, psoriatic disease, and Crohn's disease; Rinvoq to treat rheumatoid and psoriatic arthritis, ankylosing spondylitis, atopic dermatitis, axial spondyloarthropathy, ulcerative colitis, and Crohn's disease; Imbruvica for the treatment of adult patients with blood cancers; Epkinly to treat lymphoma; Elahere to treat cancer; and Venclexta/Venclyxto to treat blood cancers.
Read More - Current Price
- $193.82
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 13 Buy Ratings, 2 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $191.64 (1.1% Downside)
While Warren Buffett is beloved by many investors who rely on fundamental analysis. These investors agree with Buffett's focus on must-have brands that are reflected in products that stave off competition and deliver strong earnings and returns of invested capital (ROIC).
However, practitioners of technical analysis may find Buffett's buy-and-hold philosophy too limiting. One reason for that is that the companies Buffett loves are frequently best-in-class companies. So, while you may want to find the best price, these stocks frequently aren't going to give that to you.
But that doesn't mean you shouldn't look to own these stocks; it just means that you have to think like Buffett. That means looking for companies with a strong history of delivering a double-digit total return and, in many cases, paying attractive dividends that allow investors to experience the value of compounding.
MarketBeat provides a list of Warren Buffett stocks that provides a list of the largest holdings by Berkshire Hathway. For investors looking to “invest like Buffett" this list is a good place to start.
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