Please ensure Javascript is enabled for purposes of website accessibility

Warren Buffett's 3 Favorite Robinhood Stocks

By Keith Speights - Jun 27, 2021 at 5:55AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Oracle of Omaha might not like Robinhood, but he definitely likes several Robinhood stocks.

Warren Buffett clearly doesn't like the Robinhood trading platform very much. At Berkshire Hathaway's (BRK.A -0.23%) (BRK.B -0.28%) annual shareholder meeting in May, the famous investor said that Robinhood has "become a very significant part of the casino aspect, the casino group, that has joined into the stock market in the last year or year and a half." 

That doesn't mean that Buffett doesn't see eye-to-eye with Robinhood investors at times, though. Several of the stocks most widely held by investors on the no-commission trading platform are also in Berkshire's portfolio. Here are Buffett's three favorite Robinhood stocks based on the size of Berkshire's stake in each stock. 

Warren Buffett with people in the background.

Image source: The Motley Fool.

Apple

The second-most popular stock on Robinhood is literally the Apple (AAPL -0.19%) of Buffett's eye. Apple is by far the largest holding in Berkshire's equity portfolio. Last year, Buffett said that Apple was "probably the best business I know in the world." 

Why does the legendary investor like Apple so much? For one thing, Buffett has always preferred businesses that generate high margins and return on equity. At Berkshire's latest shareholder meeting, he listed Apple first as one of a handful of "terrific examples" of such businesses.

The Oracle of Omaha also likes that Apple markets "sticky" products. This is a reference to the company's ability to retain customers in its ecosystem built around the iPhone. Companies such as Apple that have loyal customer bases also tend to have strong pricing power. 

It seems likely that Buffett and Robinhood investors will be proven right about prizing Apple stock so highly. The increased adoption of 5G networks should continue to fuel higher iPhone sales. Apple's focus on augmented reality (AR) apps and devices could also pay off handsomely over the next few years.

Bank of America

Bank of America (BAC -0.59%) is without question the most popular bank stock among Robinhood investors. It's also clearly Buffett's favorite bank stock, ranking behind only Apple as the largest position in Berkshire's portfolio.

Buffett has long liked bank stocks, in general, in large part because of their ability to deliver a strong return on equity. However, over the last few quarters he has significantly trimmed Berkshire's stakes in bank stocks -- with the notable exception of Bank of America (BoA). 

There are probably three key reasons why Buffett remains such a big fan of BoA. He respects the company's management team, led by CEO Brian Moynihan. Buffett likely thinks that BoA will continue to generate increasing profits. He also almost certainly views the big bank's strong capitalization as a major plus. 

Those three attributes could very well translate to solid gains for Buffett and for many Robinhood investors. The Federal Reserve Board has already indicated that interest rate increases will be on the way in the not-too-distant future. Bank of America ranks as one of the top stocks set to benefit from these coming rate hikes.

Coca-Cola

Coca-Cola (KO 0.28%) might be a somewhat surprising member of Robinhood's top 100 most popular stocks. The beverage giant hasn't delivered impressive returns in recent years. However, there's no surprise whatsoever that Coca-Cola is a Buffett favorite. The stock ranks as Berkshire's fourth-largest holding.

Buffett thinks so highly of Coke primarily because of the company's strong moat -- the Coca-Cola brand. He understands that most customers won't go for a rival product even if it's priced lower. 

Of course, Buffett also knows that the best businesses are built to last. Coca-Cola, founded in 1892, has been the world's leading soft drink maker for longer than most people have been alive. 

Coca-Cola stock might not deliver the biggest returns for Buffett or Robinhood investors going forward. However, it's still a solid pick and remains a dividend investor's dream. Buffett, who has publicly stated that he drinks five of the company's soft drinks each day, will probably have a Coke and a smile for years to come as those dividends flow in.

Bank of America is an advertising partner of The Ascent, a Motley Fool company. Keith Speights owns shares of Apple, Bank of America, and Berkshire Hathaway (B shares). The Motley Fool owns shares of and recommends Apple and Berkshire Hathaway (B shares). The Motley Fool recommends the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), long March 2023 $120 calls on Apple, short January 2023 $200 puts on Berkshire Hathaway (B shares), short January 2023 $265 calls on Berkshire Hathaway (B shares), and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

The Coca-Cola Company Stock Quote
The Coca-Cola Company
KO
$65.06 (0.28%) $0.18
Berkshire Hathaway Inc. Stock Quote
Berkshire Hathaway Inc.
BRK.A
$456,246.14 (-0.23%) $-1,031.36
Berkshire Hathaway Inc. Stock Quote
Berkshire Hathaway Inc.
BRK.B
$303.39 (-0.28%) $0.86
Bank of America Corporation Stock Quote
Bank of America Corporation
BAC
$36.20 (-0.59%) $0.21
Apple Inc. Stock Quote
Apple Inc.
AAPL
$174.22 (-0.19%) $0.33

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
395%
 
S&P 500 Returns
128%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/18/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.