Picking stocks doesn't have to be hard. One way to make it easy is to poach a few ideas from proven, veteran investors. And no veteran is more proven than the legendary Warren Buffett. He has led Berkshire Hathaway to decades of market-beating performance with a buy-and-hold approach. The average investor would do well to follow his lead.
Here are three stocks Berkshire Hathaway holds that would likely be at home in your portfolio as well.
1. Bank of America
It's a tough time to be excited about bank stocks. The echoes of last year's collapse of SVB Financial's Silicon Valley Bank are still ringing after a similar (but less severe) meltdown from New York Community Bancorp just last month. In the meantime, demand for new loans is waning due to high interest rates while delinquencies and defaults on existing loans grow. It just doesn't feel like a great time to be invested in the sector.
But the headlines are painting a picture that is grimmer than reality for most banks. Broadly speaking, major banks are doing fine. Bank of America (BAC -0.21%) is no exception.
It's noticing a headwind, to be sure. Total deposits fell a bit during the final quarter of last year, and loan losses inched a tad higher. Its corporate banking and capital markets business also slipped slightly year over year during the fourth quarter of 2023.
None of these lulls are extraordinary, though. And they're muted by BofA's improving tangible common equity ratio as well as the healthy containment of loan losses. Its per-share book value also continues to rise. These are all signs that it is successfully navigating the storm that's rocking other banks' boats.
BofA shares aren't exactly reflecting this resilience right now. The stock is still priced well below its early 2022 peak and is still closer to October's low. That's not necessarily a bad thing, though. It has pushed the dividend yield up to a healthy 2.7%.
Berkshire Hathaway currently holds a little more than 1 billion shares of Bank of America. This $37 billion stake accounts for 10% of the conglomerate's portfolio and is its second-biggest holding.
2. Apple
What is Berkshire's single-biggest position? That's still Apple (AAPL -0.35%). Berkshire Hathaway owns more than 900 million shares, worth $157 billion -- more than 40% of the total value of its equity portfolio.
Buffett wouldn't touch Apple for many years. He has long eschewed technology stocks largely because their businesses are difficult to understand.
Technology has taken center stage, though, making the sector's stocks unavoidable by serving up most of the market's very best opportunities. It doesn't hurt that Buffett is no longer picking Berkshire's holdings all by himself; younger managers with a better handle on tech stocks' nuances might bear most of the responsibility for the fund's stake in Apple.
However Apple ended up in Buffett's portfolio, it's been an enormous winner. Since Berkshire first established a then-small position in Apple shares in early 2016, the stock has advanced from less than $30 per share (stock-split adjusted) to nearly $200. That's a big reason it has become such a huge part of Berkshire's portfolio; it's grown into an oversized trade.
Although it's one of the so-called "Magnificent Seven" stocks, it hasn't produced magnificent returns of late. Shares are currently priced where they were at the end of 2021, mostly because of slowing iPhone sales.
That could be why Berkshire even shed a small sliver of its Apple position during the fourth quarter of last year. Still, Buffett arguably realizes that even a weakened Apple is a better investment than most other companies are when they're at their best.
He has also said Berkshire has a record-breaking $167.6 billion worth of cash it can't find anything compelling to do with. That's why it's still holding 99% of the Apple position it was holding prior to the fourth quarter. Take the hint.
3. Chevron
Lastly, add energy giant Chevron (CVX 0.37%) to your list of Buffett stocks to buy in March.
Oil and natural gas stocks can be tricky because they are largely tethered to unpredictable commodity prices. Also, some companies in the sector are run more efficiently than others, and some simply hold better discovery and drilling prospects than others.
Chevron is one of the world's leading energy names in both regards, mostly because of its sheer size. The company has the financial wherewithal to buy and develop the projects it needs when it needs them. For example, it recently completed its acquisition of PDC Energy, adding more than 1 billion barrels of proven oil reserves to its portfolio.
This ability to purchase or develop oil and gas wells isn't the only reason to own Chevron; it's also a refiner, offering another profit center. Although the aim of a carbon-free future supported by environmentally friendlier renewable energy is worth pursuing, oil and gas alone still account for roughly half of the world's energy consumption.
It will be decades before alternative energy sources like solar and wind can take over. The International Energy Agency says worldwide demand for crude oil will continue to grow before peaking at 105.7 million barrels per day in 2028. And even then, we'll still need massive amounts of it for several more decades. Standard & Poor's predicts that in 2050, oil will still be the world's single-biggest source of energy, with renewables a close second.
Chevron stock hasn't really gone anywhere since early 2022, but it still has plenty of long-term upside. In the meantime, Berkshire's 126 million shares of the energy company are paying 4.2% of their current value in dividends.
