My Top 2 Stocks: Apple and Berkshire Hathaway

Stocks are like underwear: The flashy ones get all the visibility, but can cause a whole bunch of trouble. Today, I'm letting readers in on my trustiest pair of stocks, my two top cash holdings that help me sleep at night. I'll outline my bullish thesis and let you know whether I think there's a stock sale for you today.

Long on Buffett
When investors decide to put their money behind Berkshire Hathaway (NYSE: BRK-B  ) (NYSE: BRK-A  ) , their investing thesis often consists of two words: Warren Buffett. Who can blame them? It's hardly an original move to let one of the wealthiest men on earth manage your money, but creativity points don't make money.

My investing thesis begins with Warren Buffett, but it doesn't stop there. The Oracle of Omaha hasn't kept his good habits to himself, and Berkshire Hathaway has continually proven that it's more than its head honcho. Buffett's assembled a powerful team of level-headed, long-term managers, and the company's fundamentals continue to propel its financials.

Its sales have increased 50% in the past five years, while diluted EPS has shot up over 175%. Berkshire's book value lagged the S&P 500 with a 14% increase for 2012, but the company's market-beating 31% stock return should keep investors smiling.

^SPX Chart

Source: ^SPX data by YCharts.

Warren Buffett has the Midas touch, and he's got his finger on the pulse of three major industries that mainstream investors have shunned: solar, wind, and rail.

Its 579 MW solar farm purchase from SunPower and partnerships with First Solar (NASDAQ: FSLR  ) and General Electric (NYSE: GE  ) further affirm that Berkshire has key allies in its quest to turn America green. As an aspiring environmentalist, I can feel good that Buffett has chosen clean and increasingly efficient companies to lead his shareholders into the future.

The company's recent Heinz investment is the icing (or, rather, ketchup) on my cake: I'm now investing in something I personally know and love.

Apple's profit pie
Apple (NASDAQ: AAPL  ) is getting cored by Mr. Market, but its 40% dip hasn't done much to sour my opinion of this stock. Recently, the world's largest company by market cap, this corporation needs no introduction.

As fellow Fool Eric Bleeker points out, Apple's 2013 trading frenzy is uncomfortably close to that of a penny stock. Institutional selling may have started the slide, but market rationality comes to those who wait. The company's massive margins are envious, but its true staying power comes from solid management and $100 billion in cash.

Naysayers point to Samsung as the commoditizer of Apple's iPhone and iPad, and they may be partially correct. But even if sales tighten, its suite of ever-growing products and services are what convince me of this company's long-term value.

Apple's brand packs a powerful punch, and I like what the tech company stands for. It's faced down some serious supply chain issues and has emerged as an environmental leader in a sector known for its dirty habits.

Common characteristics
It should come as no surprise that there are commonalities between Apple and Berkshire Hathaway. Both corporations have excellent management, first-rate branding, a long-term outlook, and -- in what I promise is more than shameless self-promotion -- official Motley Fool newsletter recommendations. Following the herd is not the fail-proof way to profit in the investing world, but these companies have won their Foolish seal of approval for all the right reasons.

But don't take my word for it. Find out for yourself by clicking the links below, where premium reports will lay out everything you need to know about Apple and Berkshire Hathaway. From their big, fat futures to their deepest, darkest secrets, check out these deep dives to make sure that, like I have, these two companies are ready to pull profits for your portfolio.

And as a final bonus, our co-founder, Tom Gardner, recently revealed his top two stocks as well. Apple and Berkshire Hathaway have gotten his thumbs-up, but be sure to click here to discover the surprising pair of companies that lay claim to his cash.


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  • Report this Comment On March 12, 2013, at 9:03 PM, DanManners wrote:

    Look, Apple is not innovating fast enough. Gene Munster told that to Bloomberg.

    1. If you are reading here chances are you know of all the problems.

    2. Apple is not innovating, not producing products fast enought

    3. When they are released it can't make them fast enough.

    4. Only one size phone. So that cuts out so many customers. It is dumb. No PC here tonight.

    5. Apple will not have a China Mobile deal this year or next. No iTV; no iWatch; no bigger dividend or buyback that means anything; no new product. Only a minor upgrade on the iphone5. No cheaper phone for 3rd world markets.

    The fact that the stock is about to have dropped in half since the high only 6 months ago, shows Tim Cook could care less.

    Apple is arrogant and needs to realize we the shareholders matter. Cook will never recognize that. The stock price is in a free fall and everyone realizes it will never stop.

    Oh it will you say? When they release a buggy and boring upgrade. That might just drive the stock down. When they give a buyback or dividend increase. The dividend would have to be much higher to make a dent and then the stock will just take a lower p/e enventually. When the stock is at $ 200 life Vanity Fair predicts and they bought back half the stock so now Apple costs $ 400 an is a bargan. But the stock will just take a multiple that is 1/2 what it was. Meaning nothing can stop this slide.

    Tim Cook must be having a great time. Because I can only conclude he loves Apple stock sliding.

  • Report this Comment On March 13, 2013, at 9:25 AM, commoncents33 wrote:

    Apple has over $140,000,000,000 cash as of today.

    Not to pick nits, but rounding that down to $100B is kind of weak. That error in stated cash is more than all but a couple businesses have in total.

    Which, as you suggest, implies Apple is doing something special.

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