Latest news with #Buffett-approved
Yahoo
3 days ago
- Business
- Yahoo
3 Warren Buffett Stocks to Buy Hand Over Fist in June
American Express has gradually grown into one of Berkshire's top positions. Capital One Financial recently became a more formidable credit card powerhouse. Fossil fuels may be on their way to being displaced by renewables, but that still leaves a long runway for companies like Occidental Petroleum. 10 stocks we like better than American Express › He may be set to step down as head of Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) at the end of this year, but most of the conglomerate's stock holdings are still Warren Buffett's picks. So if you're looking for Buffett-approved ideas, Berkshire's portfolio is still the place to find them. Here are three in particular that you may want to dive into before the end of this month. After nearly two decades of slow and steady (and mostly unheralded) growth, but also due to the recent downsizing of its stake in Bank of America, American Express (NYSE: AXP) has become Berkshire Hathaway's second-biggest holding. With 151.6 million shares, Berkshire owns about 22% of the credit card lender, and that $44.5 billion position makes up 16% of the value of Berkshire's stock portfolio. What's so special about this seemingly ho-hum outfit that's inspired Buffett to not only stick with it for this long, but allow it to become such a major piece of Berkshire's portfolio? It's not nearly as surprising as it may seem at first glance. See, while American Express is frequently lumped together with Visa and Mastercard (for obvious reasons), it's not quite an apples-to-apples comparison. Its business could be better described as a marketing and rewards program that just happens to be centered around a card payments network. Its card holders are willing to pay as much as $700 per year for perks like credit toward streaming services, cash back on hotel stays, access to airport lounges, and other rewards. This is a surprisingly well-protected business model. Although it wouldn't be accurate to say that only affluent households hold Amex cards, the company certainly focuses on the higher-income crowd -- a demographic that isn't as adversely impacted by macroeconomic headwinds like the ones blowing now. For perspective, last quarter, the company's total billed business grew 6% year over year, boosting its currency-adjusted revenue by 8%. Restaurant spending was particularly strong, growing 8%, and underscoring the argument that bigger spenders aren't actually cutting back. American Express is also one of the few outfits that hasn't dialed back its full-year profit outlook. It's still expecting revenue growth of between 8% and 10% to produce earnings per share of between $15 and $15.50. That would be up roughly 14% from last year's earnings of $13.35 per share -- better profit growth than most companies are expected to produce this year. If American Express sits at one end of the consumerism continuum, Capital One Financial (NYSE: COF) occupies a space at the other. Although most people can qualify for a Capital One card, they're well suited for people looking to build (or rebuild) their credit. Still, there's plenty of demand for credit cards from the sections of the marketplace that it caters to, in addition to the piece of the business that Discover served before Capital One's recently completed acquisition of it. Don't underestimate this pairing, either. Combined, those now-merged outfits could loosen the firm grip that industry titans Mastercard and Visa have had on the credit card payments network market for a long time now. See, it's a mostly unrecognized nuance from the consumer perspective, but every credit card payment quietly involves several parties. Card issuers serve as the lenders to credit card-holding consumers, but those issuers also need a means of rapidly approving and processing payments for retailers and other merchants. Visa and Mastercard are the largest of the middleman outfits that provide those networks -- and who collect small fees for every transaction. Capital One has long relied on them, as do all the other issuers of cards with the Mastercard and Visa logos. AmEx operates its own payment network (albeit a smaller one) for its branded cards, keeping everything in house. Discover, however, is a lender that also runs a payments network of its own. Although it's still small by comparison, together, Capital One and Discover have enough scale, leverage, and technical capabilities to serve many customers without the involvement of Visa or Mastercard. There's no way Buffett saw this merger coming back in early 2023 when Berkshire Hathaway first established what is now a 7.1 million share stake in Capital One worth about $1.3 billion. In fact, the conglomerate has actually trimmed its position in the financial services company a bit since early 2024. It's a Buffett holding nonetheless, however, and one that Goldman Sachs recently added to its so-called "conviction list" of tickers that it firmly believes are undervalued and worth owning. Finally, add Occidental Petroleum (NYSE: OXY) to your list of Warren Buffett stocks to buy hand over fist this month. Against the backdrop of renewable energy's proliferation and growing efforts by governments, businesses, and individuals worldwide to reduce their use of fossil fuels, an oil and natural gas extractor like Occidental might not seem to be an obvious holding for a highly traditional and old-school stock picker like Buffett. Yet despite the continued adoption of renewable energy sources, the world will still need more and more oil for a long time. Researchers at Goldman Sachs don't believe we'll reach "peak oil" -- the point at which the average daily consumption of crude oil stops growing and starts shrinking -- until 2034, in fact, and even beyond that point, we'll need lots of it for several more decades. OPEC doesn't believe crude consumption's growth will peak until 2045 at the earliest, while oil giant ExxonMobil is forecasting that oil demand will peak in 2030, but also anticipates that in 2050, we'll still need about the same amount of it that we do in 2030. And it expects that overall, in 25 years, oil and natural gas will still account for more than half of the global energy mix. In other words, there's still lots of good money to be made in the fossil fuel business by a low-cost operator like Occidental Petroleum. To the extent the oil and natural gas industry business is living on borrowed time, though, Occidental is evolving brilliantly. The company's carbon-capture technology (literally) sucks carbon dioxide out of the ambient air. The business just needs scale, which is being encouraged by incentives. That's one of the chief reasons Precedence Research believes the global carbon capture market will grow at an annualized rate of more than 21% through 2034. This stock hasn't been a strong performer since late 2022. Indeed, it has lost nearly half its value since then. That's only because oil prices have been in a slump since then, though, dragging the industry's earnings down with it. Buffett has been unfazed, however. Not only has he stuck with Occidental, he has added to Berkshire's stake, growing it into a 264.9 million share position worth, at current share prices, about $13 billion. That's nearly 6% of Berkshire's stock portfolio and 27% of Occidental Petroleum's entire float. Before you buy stock in American Express, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and American Express wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $656,825!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $865,550!* Now, it's worth noting Stock Advisor's total average return is 994% — a market-crushing outperformance compared to 172% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 2, 2025 American Express is an advertising partner of Motley Fool Money. Bank of America is an advertising partner of Motley Fool Money. James Brumley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bank of America, Berkshire Hathaway, Goldman Sachs Group, Mastercard, and Visa. The Motley Fool recommends Capital One Financial and Occidental Petroleum. The Motley Fool has a disclosure policy. 3 Warren Buffett Stocks to Buy Hand Over Fist in June was originally published by The Motley Fool
Globe and Mail
14-02-2025
- Business
- Globe and Mail
2 Warren Buffett Stocks to Hold Forever
Many investors are drawn to Warren Buffett's investing style. Buying shares of exceptional companies at fair prices can lead to spectacular results over the long term. There's no better place to find "forever" worthy investments than Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) itself. Here are two Buffett-approved stocks that can help you grow your savings for a happy retirement. 1. Coca-Cola While Buffett reduced stakes in a few of Berkshire's largest holdings last year, he left Berkshire's 400 million shares of Coca-Cola (NYSE: KO) untouched. The stock hasn't outperformed the S&P 500 in recent years, but this outstanding business continues to generate profits that fund an attractive dividend yield. It's a top brand in a growing beverage industry. A key reason to hold Coca-Cola stock over the long term is that strong consumer brands can raise prices to offset inflationary costs in the supply chain. The company's financial results last year demonstrated this. In the third quarter, unit case volumes were down 1%, reflecting a budget-strained consumer, but adjusted revenues still grew 9% over the year-ago quarter, partly driven by price adjustments. Long term, the beverage industry has great prospects. A growing middle class in China and India should continue to drive sales opportunities for Coca-Cola's large portfolio of brands that include a range of teas, juices, and sparkling sodas. Statista forecasts the industry to grow 8% per year through 2029 to reach $380 billion annually. Management believes it can grow adjusted revenue by close to 6% annually over the long term. With the use of artificial intelligence (AI) in managing costs and pricing, investors should expect Coca-Cola to see gradually improving margins. This could lead to marginally higher earnings growth between 8% to 10% per year. The combination of a 3% forward dividend yield and high-single-digit earnings growth should translate to annualized returns of around 10% over the next decade. 2. Berkshire Hathaway One of the best stocks to buy and hold forever is none other than Buffett's largest personal holding, Berkshire Hathaway. Buffett took control of the once-struggling textile mill in the 1960s and reallocated the cash flows to better businesses. The result is a large collection of outstanding companies that generate $452 billion in trailing revenue. Berkshire's operations span insurance, railroad, energy, retail, and more. These businesses generated pre-tax earnings of $38 billion through the first nine months of 2024, up from $33 billion the year before. Importantly, each of the dozens of businesses under Berkshire's ownership possesses a durable competitive advantage that ensures their future success. While Buffett is still CEO, he won't be around forever, but shareholders are in good hands. Greg Abel, who oversees Berkshire's non-insurance operations, will take over as CEO when Buffett is gone. Abel understands the culture of Berkshire and will continue to manage capital in a way that grows the value of the business for many years. Buffett has truly built a great company to last. It's sitting on $320 billion of cash and short-term securities, with another $271 billion in stocks as of the third quarter, including large stakes in Apple, Bank of America, and American Express. Its operating businesses, including GEICO and BNSF railroad, are also run by skilled business people, which also factored into Buffett's decision to buy each one of them. All said, Coca-Cola and Berkshire Hathaway will almost certainly be around for decades to come, growing in value for shareholders. Should you invest $1,000 in Coca-Cola right now? Before you buy stock in Coca-Cola, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Coca-Cola wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $803,695!* Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*. Learn more » *Stock Advisor returns as of February 7, 2025 American Express is an advertising partner of Motley Fool Money. Bank of America is an advertising partner of Motley Fool Money. John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Bank of America, and Berkshire Hathaway. The Motley Fool has a disclosure policy.
