Berkshire Hathaway (BRK.A 1.18%) (BRK.B 1.30%) CEO Warren Buffett has a knack for making money. Despite navigating his way through more than a half-dozen bear markets since taking the reins in 1965, the Oracle of Omaha has created more than $590 billion in shareholder value and overseen a better than 3,600,000% aggregate return for his company's Class A shares (BRK.A).
Warren Buffett's success as an investor is the result of a long list of factors, including his love of dividend-paying stocks and time-tested businesses that can outperform in virtually any economic environment. The latter is especially noteworthy with both the benchmark S&P 500 and tech-heavy Nasdaq Composite (^IXIC -2.05%) mired in a bear market, with respective peak declines of 24% and 34%, as of last weekend.
Berkshire Hathaway CEO Warren Buffett. Image source: The Motley Fool.
Amid this bear market carnage, nine Warren Buffett stocks have managed to deliver a positive year-to-date return, not counting dividends paid.
1. Coca-Cola: Up 0.4% year to date
Beverage giant Coca-Cola (KO 2.14%) is Warren Buffett's longest-tenured holding (34 years) and clocks in with a marginal gain of 0.4% for the year.
Although inflation is soaring domestically and in a number of key markets globally, many of Coca-Cola's beverage products are viewed as non-discretionary items. In other words, people are unlikely to reduce their consumption of Coke products just because prices are up and the domestic or international economic outlook has weakened.
What's more, Coca-Cola is operating in all but three countries worldwide (Cuba, North Korea, and Russia), which gives it incredible geographic diversity. It's able to rake in consistent operating cash flow from developed markets while growing sales at a faster rate in emerging markets.
2. Kroger: Up 2.1%
The United States' leading supermarket chain, Kroger (KR 1.80%), is another Buffett stock that's outperforming as the Nasdaq tumbles.
Kroger's success during uncertain times is due to the fact that it sells basic necessities. No matter how poorly the stock market or U.S. economy perform, consumers still need to buy food, hygiene, and household products. Even though operating margins for supermarkets are razor-thin, there's a predictable level of cash flow the company can expect to generate each year.
However, Kroger is only expected to grow sales by 2% next year, which means its stock is somewhat pricey, even at 12 times forecast earnings in fiscal 2023.
3. Markel: Up 3.9%
Conglomerate Markel (MKL 1.43%), which was a first-quarter addition to Berkshire Hathaway's portfolio, is also having a respectable year, with its shares up nearly 4%.
Markel is often viewed as a mini-Berkshire Hathaway. It has a highly efficient insurance business that helped generate one of its most profitable years on record in 2021. Because catastrophic losses are inevitable in the insurance industry, Markel has had little trouble raising premiums when necessary to ensure continued profitability.
The company also invests in and acquires businesses, albeit on a smaller scale than Berkshire Hathaway. Since the beginning of the century, Markel's book value has soared nearly 3,600%!
4. T-Mobile: Up 10%
Telecom stocks are typically a safe investment during periods of heightened volatility, as evidenced by T-Mobile (TMUS 0.92%) gaining 10% while the Nasdaq has lost around a third of its value.
The beauty of telecom stocks is that having a wireless device and wireless access have become basic necessities over the past two decades. Stock corrections and economic downturns usually have little impact on wireless churn rates. This means continued profitability for the big domestic players.
T-Mobile has also jumped out to an early lead with its 5G wireless penetration in the U.S. Though upgrading its wireless infrastructure to handle 5G speeds will be costly, the juicy margins associated with increased data consumption should be well worth it.
Image source: Getty Images.
5. BYD: Up 10.1%
China-based electric vehicle (EV) and battery company BYD (BYDD.F -1.38%) edges out T-Mobile by the slimmest of margins for a year-to-date gain of 10.1%.
Whereas most automakers have been pulverized by parts shortages and/or COVID-19 pandemic-related provincial shutdowns in China, BYD has been virtually unstoppable. During the first quarter (Q1), BYD sold more than 291,000 vehicles (a mix of EVs and hybrids), up 180% from the comparable quarter in 2021. Sales of electric-only vehicles were up 270%.
To boot, battery installations in Q1 more than tripled to 10.4 gigawatt-hours, accounting for over 20% of China's battery installation market share to begin the year.
6. Activision Blizzard: Up 12.3%
Whereas most tech stocks have been clobbered in 2022, gaming company Activision Blizzard (ATVI) has defied the Nasdaq bear market. There's a good reason for that.
In January, software kingpin Microsoft made a $95 all-cash offer to acquire Activision Blizzard. Though shares are up 12% in the wake of this announcement, they're still trading well below Microsoft's all-cash offer price due to the uncertainty of whether or not U.S. regulators will approve the combination.
Interestingly, the usually long-term-focused Warren Buffett made clear during his company's annual shareholder meeting that Berkshire Hathaway's position in Activision is purely an arbitrage opportunity based on shares trading markedly below Microsoft's offer price.
7. McKesson: Up 20.9%
Healthcare services company McKesson (MCK 1.16%), which was added to Berkshire's portfolio in Q1, has been truly superb. It's outperformed the Nasdaq by more than 50 percentage points on a year-to-date basis.
The great thing about healthcare stocks is they're highly defensive. No matter how bad things get for the stock market, people still get sick and require medical care. That means drugmakers, medical device companies, and healthcare service providers like McKesson, which handles drug and medical device distribution, can expect a steady level of demand.
McKesson's capital return program is also bound to turn heads. In fiscal 2022, which ended March 31, 2022, the company repurchased roughly $3.5 billion worth of its common stock. Over the past 5 1/2 years, it's bought back more than $11 billion worth of its shares.
8. Chevron: Up 26.4%
Perhaps it's no surprise that oil major Chevron (CVX 1.54%), which Berkshire Hathaway absolutely piled into in Q1, has performed well.
Chevron's outperformance is a reflection of crude oil and natural gas prices hitting multidecade highs. There's a good likelihood that energy prices will remain elevated for the foreseeable future. Energy companies were forced to pare back investments during the pandemic, and now the global energy complex has been disrupted by Russia's invasion of Ukraine. In short, there's no way to quickly ramp up supply in order to lower spot prices.
But keep in mind that Chevron is also an integrated energy company. It operates pipelines, refineries, and chemical plants that help it hedge against significant downside in crude oil and natural gas prices.
9. Occidental Petroleum: Up 92.1%
Lastly, the crown for top-performing Warren Buffett stock in 2022 goes to oil and gas company Occidental Petroleum (OXY 0.89%). Shares have nearly doubled, and are outperforming the Nasdaq by more than 120 percentage points this year.
Although Occidental is an integrated company like Chevron, it generates the bulk of its income from its upstream drilling segment. During Q1, the price Occidental recognized globally per barrel of oil was over $35 higher than in the prior-year period. As long as oil, natural gas, and natural gas liquid prices remain elevated, Occidental Petroleum is capable of producing jaw-dropping profits.
However, Occidental's acquisition of Anadarko in 2019 put its balance sheet under serious strain. Despite repaying $9.6 billion in debt over the trailing year, Occidental ended March with a still-mountainous $25.9 billion in net debt.
