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"What are your top two stock holdings?"
The question strips away opinion, growth projections, and hypotheticals, and shows you a small truth about how you're investing your money.
Here's what our analysts are seeing when they open up their brokerage accounts.
Russ Krull: McDonald's and Chevron. These two companies share key characteristics that make them a good fit for my dividend-oriented portfolio: good current yield, reasonable payout ratios, and growth prospects that make the long strings of annual dividend raises likely to continue. McDonald's had a rough 2012, but added another year to a string of payout hikes dating back to 1976. The company has adapted the menu to add premium, higher margin offerings and it's well positioned to weather weak economies in the U.S. and overseas. With Chevron, I get exposure to a wide range of energy operations in one company, a good dividend, and an inflation hedge, all trading at a single-digit multiple. As a bonus, it doesn't bother me as much when prices at the pump ratchet up. There are a number of good dividend growth stories in the market. I don't know if these two are the very best, but I expect they'll be paying dividends and giving shareholders annual raises for a long time to come. (More)
Tim Beyers: My top two holdings are Netflix (NASDAQ: NFLX ) and Apple (NASDAQ: AAPL ) , and I still like both companies very much, especially when I think about the 900-million pay-TV viewers around the world today. Netflix will serve a fraction of those customers with its unique content -- that I expect it to command a premium over time. A good number will encounter the streamer on a next-generation Apple TV -- the one that has the "code-cracked" that features Steve Jobs spoke of in Walter Isaacson's biography. Television is changing, and these two companies are helping to lead the revolution. (More)
Dan Caplinger: Berkshire Hathaway (NYSE: BRK-B ) and Fairfax Financial. I've been a Berkshire shareholder since the late 1990s, when the tech boom made Warren Buffett look like a backward buffoon until the bubble inevitably burst, rewarding the old-economy stocks in his portfolio. That experience showed the value of using insurance-premium money for long-term investment, which led to considering other companies with similar models. Fairfax offers the geographical diversity of a Canadian stock along with the investing prowess of Prem Watsa, who follows many of the same philosophies that Warren Buffett uses, yet, who also comes at the market with his own unique perspective. Even though the two companies are in the same industry, they have distinctive enough portfolios to make the two a winning combination for the long run. (More)
Jim Gillies: Portfolio Recovery Associates and Biglari Holdings. Both have taken similar paths to becoming my two largest holdings. Both were purchased at low, advantageous prices. Both were purchased with the perception that their growth horizon was huge: the multi-billion dollar world of charged-off debt for Portfolio; value investments by a skilled capital allocator for Biglari. Both investments were intended to be left untouched, adding shares at opportune times. Over the last eight years, I've come to admire Portfolio's management for their adeptness at managing and expanding their business, and I expect to long continue being a shareholder. I'm more mercenary in regards to Biglari based on the evolution of its CEO Sardar Biglari. I appreciate his work, but, looking out for my own best interest, my shares are available for sale at the right price. (More)
Anders Bylund: Netflix and Intuitive Surgical (NASDAQ: ISRG ) . I saw Netflix's huge long-term opportunity at the end of a three-month deep dive into the video rental market. Holding this stock has been a heck of a roller coaster, but I'm still convinced that Netflix will end up a large-cap media empire in a decade or so. It's a multi-bagger in the making, even at today's prices. Intuitive's robotic surgery products are an innovative play on the Baby Boomer generation's rising health care needs, and it's protected by thick walls of patents and FDA approvals. I believe it's the safest health-care stock available on the high-growth side of that market. I plan to own Intuitive for at least another 10 to 15 years, and Netflix perhaps for the rest of my life -- keeping in mind that I'm just 38 now. (More)
David Hanson: Nike and Goldman Sachs. My top two holdings are completely different in almost every way, but both companies have incredible brand power, and a reputation for excellence. Ever since Michael Jordan and Bo Jackson signed with Nike, consumers and investors have seen a continuous boom in Nike's presence and revenue. Despite being an established company, Nike is still growing fairly rapidly. Since 2004, overall revenues have more than doubled! As for Goldman, despite the elevated levels of disgust from many Americans, Goldman Sachs remains one of the most respected and talented institutions in the world. Goldman Sachs is still considered the premier global investment bank, and has deeply-rooted relationships across its institutional client services. (More)
Justin Loiseau: Apple and Berkshire Hathaway seem to operate at opposite ends of the bull/bear spectrum, but both companies have won top spots in my portfolio. Apple's recent dip doesn't faze my long-term outlook, and I'm impressed with the company's continual creation of an all-encompassing suite of products and services. Its excellent management, high quality brand, and $100 billion plus in cash give this company the wiggle room to turn exciting ideas into reality, while emerging markets will help boost its current growth. Berkshire Hathaway adds level-headed diversity to my portfolio. Its insurance investments provide solid income, while more recent additions of wind, solar, and rail represent calculated predictions for the future of America. Warren Buffett's amassed an outstanding team, and his company's financials continue to be the cream of the crop. With Apple's recent 40% drop and Berkshire's 1.4 price-to-book value, now could be the perfect opportunity to get in and stay in. (More)
Aimee Duffy: Starbucks and McCormick. I picked up large positions in both of these stocks when I rolled over an old 401(k) from a former employer. These two companies exhibit strong fundamentals and completely dominate the competition, yet the markets for their products are far from saturated. Starbucks combines leadership and commitment to its employees with an American market that is consuming half the amount of coffee we did at our peak in 1946 -- not to mention tremendous opportunity abroad. McCormick dominates the spice rack in the grocery store, and has returned an average of 15.1% since 1981. Both Starbucks and McCormick are blowing my old mutual funds out of the water, and I'm glad I finally got around to rolling over the old account. I look forward to holding both of these companies for many years to come. (More)
Anand Chokkavelu, CFA: Berkshire Hathaway and Accenture. I picked up most of my shares in these two during the financial crisis, and they have grown to be my largest holdings (excluding Vanguard ETFs and a microcap bank). Warren Buffett's Berkshire Hathaway finally won my dollars when I saw the sweetheart deals troubled-at-the-time companies, like Goldman Sachs and General Electric were throwing at Buffett in exchange for his investing seal of approval. Since I couldn't get those deals myself, investing in the master was the next-best thing. As for Accenture, I gained first-hand knowledge of the quality of its consulting operations as an employee. Both Berkshire and Accenture remain companies I expect to hold for a long time. (More)
Tamara Rutter: Tesla Motors and Target. I first purchased shares in these companies when I started working for The Motley Fool in 2011. My positions in the stocks have grown significantly since then, as I took advantage of dips in the stock prices. Today, the electric carmaker and discount retailer are my two largest holdings. Tesla caught my attention after the company's CEO, Elon Musk, came to speak at Fool headquarters two years ago. Musk struck me as a disruptive innovator, and Tesla as a company that would grow from humble beginnings to transform the auto industry. I haven't looked back since. Target, on the other hand, was a company I had followed for many years. I liked Target's ongoing partnerships with fashion's top designers, and believed in the company's plan to expand into Canada. I suspect both Tesla and Target will be core holdings in my portfolio for years to come. (More)
David Meier: InvenSense and Infinera. Over the years, I have learned a great deal about the power of disruptive companies. Not only can they transform industries, they can transform portfolios, too. InvenSense's motion control sensors are finding their ways into all sorts of devices, from smartphones and tablets to wearable computers. Infinera manufactures optical network equipment that enables telecoms to meet the ever-growing demand for data in a cost-effective manner. Over the next five years, I think both of these disruptive technology companies can generate multi-bagger returns, which is why they are my top two holdings. (More)
Nicole Seghetti: Caterpillar and Oracle. I bought Caterpillar in the midst of the financial crisis, as the construction and building industry was coming to a screeching halt. I liked the company's industry-leading position and its product and geographic diversification. I was interested in buying Caterpillar to potentially profit from the global trend of urbanization. I bought Oracle in 1998, rode it up the tech bubble, suffered through the tech bust, and held on to it. I like the company's recurring revenue business model, high customer retention, and synergies from acquisitions. Both Caterpillar and Oracle remain companies that I think are great for investors today, and that I intend to hold for many years. (More)
Robert Eberhard: Berkshire Hathaway and Waste Management. These holdings were among the first I purchased when building my portfolio anew last year. Berkshire Hathaway, led by Warren Buffett and team, is probably the best allocator of capital available in the market today, both among its stock portfolio and the companies that it buys outright. Waste Management is the leading trash hauler in America, and this is one of the reasons it has been able to boost its dividend for each of the past 10 years, something that I expect to continue. Now that I have built my portfolio to the number of companies that I am comfortable with, both of these companies will be the first to receive any new money. (More)
Sean Williams: Thompson Creek Metals and Bank of America (NYSE: BAC ) . Both companies originally caught my attention for being deeply discounted and widely disliked – a perfect combination for my value-oriented and contrarian portfolio.
I picked up the majority of my shares in Thompson Creek last year, shortly after it fell off a cliff in May. Higher costs for the build-out of its Mt. Milligan copper and gold mine have worried investors, but I see plenty of profit potential once the mine comes online in the fourth-quarter of this year. With copper in high demand in China, and its remaining 48% gold interest there to offset its production costs, Mt. Milligan could be one of the lowest-cost copper mines in existence when it's completed.
As for Bank of America, its attraction was in the brand value and the fact that I felt it had the underlying assets to support a significantly higher valuation. With many of my shares purchased in November 2011, I've more than doubled my original investment, and anticipate its better liquidity, higher Treasury rates, and the potential for a heftier dividend could send it modestly higher from here. (More)
Matt DiLallo: Monsanto and Autoliv. I've added these two lesser-known names to my portfolio through the strategic use of options. In both cases, the companies have slowly grown to the top of my portfolio, while I've harvested income off the top by writing covered calls. I like that both are driven by the mission to provide a solution to some of our world's greatest challenges. At Monsanto, the mission is simple: It wants to help feed the world. Autoliv's mission is simply to save lives. As each meets these challenges head on I believe both will provide investors with profitable growth for years to come. I plan on holding each for as long as I can harvest options income, though I'd not be afraid to let either be called away if the valuation were ever to get too rich. (More)
John Reeves: My two top holdings are Google and Apple. In my personal portfolio, I like to keep things super simple. First, I look for outstanding businesses with solid balance sheets. Then, I look for management I can trust. Finally, I like companies that have promising growth prospects. Clearly, Google and Apple deliver on all three fronts. I especially like that both are well-positioned to benefit from the huge mobile trend. Recently, I've been adding to my position in Apple. It's the most profitable company in the world, and it has tremendous demand for its products. Oh, and it pays a generous dividend! I honestly can't envision a future that doesn't involve both of these two companies prospering. That's why they're my two biggest holdings. (More)
Two more great stocks
We hope you've enjoyed reading about each of our analysts' top two stocks -- but we're not finished, yet. Our co-founder Tom Gardner recently revealed his top two stocks, as well. For the names of that surprising pair of companies, click here.