Warren Buffett is one of the most successful investors in the history of the stock market. He is known for having a sixth sense for picking stocks that will yield significant returns. His investment firm, Berkshire Hathaway (ticker: BRK.A), has a portfolio value of $293 billion, holding assets in the consumer goods, finance, and tech sectors.
Over the years, this investment guru has stockpiled more than $100 billion in cash at Berkshire Hathaway, primarily for share repurchases. However, although Buffett’s investing strategy has brought him billions of dollars in returns, it is often criticised in the finance world as he approaches the winter of his career that spans over 40 years. Unlike most other seasoned investors, Buffett has largely ignored the explosive and enticing growth tech companies offer and concentrated on investing in value stocks.
In May this year, Buffet responded to critics about his decision to shun the tech sector by sharing a list of the most valuable companies in the world in 1989 at a shareholders’ meeting. Interestingly, none of them is at the top right now.
Despite not buying much into the tech sector, Buffett’s Berkshire Hathaway has made significant returns on some of the tech stocks it holds, like China-based automaker BYD (ticker: BYDDF), whose shares have surged 259% year-to-date, and Apple Inc. (ticker: AAPL), a $2 trillion-dollar company posting profits quarter after quarter. Other companies in his portfolio include Bank of America Corporation (NYSE: BAC) and American Express Company (NYSE: AXP)
According to Warren Buffett, here is a list of the 10 best stocks to buy, based on Berkshire Hathaway ranking of its investment portfolio at the end of Q2 FY2021.
10. Charter Communications, Inc. (ticker: CHTR). Number of Hedge Fund Holders: 75
This telecommunications and mass media company is based in Connecticut and markets broadband and cable services branded as Charter Spectrum. Berkshire Hathaway owns 5.2 million shares in Charter Communications worth $3.7 billion. This is 1.28% of the investment portfolio of Berkshire Hathaway.
Over two weeks ago, Argus Investors’ Counsel, an investment advisor, issued a “Buy” rating on Charter Communications’ stock and raised its price target to $900 from $775, betting on the company’s upgrade of its network that will provide high-speed internet to customers.
According to Warren Buffett, Charter Communications has a market capitalisation of $147.10 billion, and its stock is trading at $800 per share; this is one of the best stocks to buy.
9. DaVita Inc. (ticker: DVA). Number of Hedge Fund Holders: 39
Headquartered in Colorado, DaVita is a healthcare company that provides kidney dialysis services to over 204,200 patients through a network of 2,816 outpatient dialysis centres in the United States. Berkshire Hathaway owns 36 million shares in the company, worth more than $4.3 billion, which makes up 1.48% of Berkshire’s portfolio.
Last month, Deutsche Bank AG, an investment bank and financial services company, maintained a “Buy” rating on DaVita’s stock and raised its price target to $207 from $150. DaVita Inc. has a market capitalisation of $13.85 billion, and its shares are trading at $132.19.
8. U.S. Bancorp (ticker: USB). Number of Hedge Fund Holders: 41
This Minnesota-based financial services holding company is also part of the Berkshire Hathaway portfolio. The Buffett-led company owns more than 128 million shares of U.S. Bancorp worth $7.3 billion, and this stake represents 2.5% of its portfolio. Although Buffett sold 1% of his stake in USB in Q1 FY2021, the fact that it is still in his books means it is a good buy, just like investment advisory and brokerage company Oppenheimer & Co. noted. In July, Oppenheimer raised USB’s price target to $73 from $70. The company’s stock is currently trading at $56.65 a share, with a market capitalisation of $83.99 billion.
7. Verizon Communications Inc. (ticker: VZ). Number of Hedge Fund Holders: 63
Another communications company that makes the list is Verizon Communications Inc. Berkshire Hathaway owns 158 million shares in this New York-based communications and technology company worth $8.8 billion, representing 3% of the investment firm’s portfolio.
On July 22, Cowen, an investment advisory with over 100 years of experience, stated that Verizon would outperform its expectations and raised its price target to $68 from $66. The company is currently trading at $55.26, and it has a market cap of $228.76 billion.
6. Moody’s Corporation (NYSE: MCO). Number of Hedge Fund Holders: 44
This New York-headquartered company that has been in existence for more than a century is also part of Berkshire Hathaway’s portfolio. Berkshire owns 24.6 million shares in this American business and financial services company, worth $8.9 billion, representing 3.05% of its portfolio.
On July 29, analysts at investment advisor company BMO Capital maintained an Outperform rating on Moody’s Corporation stock and revised its price target from $406 to $415. Moody’s stock is currently trading at $378.24 a share and has a market capitalisation of $70.43 billion.
5. The Kraft Heinz Company (ticker: KHC). Number of Hedge Fund Holders: 33
The Kraft Heinz Company makes and sells food products and beverages, with its most popular product being the Heinz Tomato Ketchup. According to the latest data from Berkshire Hathaway, the investment firm owns 325 million shares in Kraft Heinz, which are worth $13.2 billion. This represents 4.53% of Berkshire Hathaway’s portfolio.
The Kraft Heinz Company’s stock is currently trading at $36.51, and it has a market capitalisation of $44.66 billion.
4. The Coca-Cola Company (ticker: KO). Number of hedge fund holders: 62
Adding Coca-Cola to your portfolio will help you Taste the Feeling of holding a more than a century old stock that keeps posting profits every other quarter, so much so that Berkshire Hathaway ranks this the fourth-best performing stock in their portfolio. The investment firm owns 400 million shares in Coca-Cola worth a whopping $21.6 billion, representing 7.38% of its portfolio.
Last month on the 22nd, investment bank and financial services corporation Citi Group maintained a “Neutral” rating on the beverage company’s stock, but that should not raise your eyebrows because the advisor raised Coca Cola’s price target to $60 from $57. The Coca-Cola Company currently has a market cap of $242.16 billion, and its stock is currently trading at $56.10 a share.
3. American Express Company (NYSE: AXP). Number of Hedge Fund Holders: 52
American Express Company (AMEX), headquartered in New York, provides financial and travel-related services to over 112 million business card and consumer card members. As of June 30, 2021, Berkshire Hathaway owned more than 151 million shares in AMEX worth over $25 billion. This represents 8.5% of Berkshire’s portfolio.
Nearly a month ago, analysts at RBC Capital maintained a “Sector Perform” rating on AMEX stock and raised its price target from $174 to $185. Currently, American Express Company has a market cap of $127.97 billion, and its shares are trading at $161.08 each.
2. Bank of America Corporation (NYSE: BAC). Number of Hedge Fund Holders: 87
The final financial company to make it to the list is Bank of America Corporation, in which Berkshire Hathaway owns 1 billion shares. These are worth $41 billion and represent 14.2% of the investment firm’s entire portfolio. The coronavirus pandemic affected the banking sector at the onset of the pandemic last year. Still, BAC is one of the financial industry players that have benefited from the measures of the Federal Reserve Bank that were instituted to keep the economy afloat in these trying times.
Bank of America Corporation currently has a market capitalisation of $127.97 billion, and its shares are trading at $41.24 each. On June 2, investment advisory Trust gave BAC a “Buy” rating with a price target of $48.
1. Apple Inc. (ticker: AAPL). Number of Hedge Fund Holders: 138
We had to save the best for last. Apple Inc. is the world’s largest company by market capitalisation, topping $2 trillion in market value. The iPhone maker is one of the most profitable companies, and it is only fair that investment guru Warren Buffett had to include it in his portfolio.
Berkshire Hathaway owns more than 887 million shares in Apple that are worth more than a whopping $121 billion. This takes the lion’s share of Berkshire’s investment portfolio with 41.46%.
Towards the end of last month, investment advisory company Loop Capital, just like many other Wall Street analysts, maintained a “Buy” for Apple stock and raised its price target from $150 to $165.
Apple’s stock is currently trading at $149.71 a share.
PS: Stock prices quoted are subject to change. The information contained in this article is intended for educational purposes and is not investment advice.