When Berkshire Hathaway (BRK.A -0.28%) (BRK.B -0.68%) CEO Warren Buffett buys or sells shares of a company, investors wisely pay attention. That's because the Oracle of Omaha has generated a jaw-dropping total return of 3,641,613% for his Class A shareholders (BRK.A) since taking the reins of Berkshire Hathaway more than 57 years ago.
Considering Buffett's penchant for buying high-quality stocks and hanging onto them for the long run, riding the Oracle of Omaha's coattails has proven quite profitable for decades. It's an especially smart time for investors to go shopping for Buffett stocks, with the S&P 500 and Nasdaq Composite plunging into a bear market.
What follows are five Warren Buffett stocks investors can confidently buy right now and never have to sell.
Berkshire Hathaway CEO Warren Buffett. Image source: The Motley Fool.
Amazon
The first Buffett stock that can be bought without investors losing any sleep is e-commerce leader Amazon (AMZN -1.64%). Although Amazon's leading online marketplace is susceptible to weakness during recessions, this top revenue segment isn't the key to the company potentially tripling its operating cash flow over the next four years.
Even though Amazon is estimated to bring in nearly 40% of all U.S. online retail sales in 2022, it's the company's higher-margin ancillary operating segments that are driving its profitability and cash flow. For example, the popularity of Amazon's marketplace has helped the company sign up more than 200 million Prime members worldwide. Amazon is bringing in approximately $35 billion in annual run-rate sales from subscription services, which is allowing it to reinvest in its vast logistics network and other high-growth initiatives.
The other heavy-hitter is cloud infrastructure services segment Amazon Web Services (AWS). According to a recent report from Canalys, AWS brought in an estimated 31% of cloud-service spending during the second quarter. Even though AWS only accounts for a sixth of Amazon's net sales, it's been consistently producing more than half of the company's operating income. With cloud growth still in its early innings and AWS growing into a larger percentage of Amazon's total sales, the company looks cheaper than ever, relative to its future cash flow-generating potential.
Visa
The second Warren Buffett stock investors can buy and never have to consider selling is payment processor Visa (V 0.33%). Despite being cyclical, Visa's sustainable competitive advantages make it a no-brainer stock to hold for the long term.
To begin with, Visa accounted for a whopping 54% of U.S. credit card network purchase volume in 2020. The U.S. is the leading market for consumption in the world, and Visa holds a 31-percentage-point lead over its next-closest competitor. To boot, it's the only payment processor that significantly expanded its share of the U.S. processing market following the Great Recession (2007-2009).
To add to the above, the vast majority of global transactions are still being conducted with cash. This should give Visa ample opportunity to organically expand into underbanked markets, such as the Middle East, Africa, and Southeastern Asia, and to make acquisitions to further its reach.
It's also worth noting that Visa doesn't act as a lender. By only focusing on payment processing, Visa doesn't have to worry about possible loan delinquencies, and therefore isn't required to set aside capital to cover potential loan losses. This is a big reason why Visa's profit margin is usually at or above 50%.
The GMC Hummer EV is one of 30 electric vehicles GM is releasing by the end of 2025. Image source: General Motors.
General Motors
A third Warren Buffett stock to buy and never sell is Detroit auto giant General Motors (GM -0.04%). Though economic weakness and historically high inflation threaten to sap auto sales in the short run, the long-awaited growth catalyst for General Motors has arrived.
The electrification of autos for consumers and enterprise fleets is the multidecade opportunity the auto industry has been waiting for. With most developed countries angling to reduce their carbon footprints, electric vehicles (EVs) are viewed as a sustainable growth story.
General Motors intends to spend $35 billion on EVs, autonomous vehicles, and battery research through the midpoint of the decade. The expectation, according to CEO Mary Barra, is for GM to roll out 30 new EVs by the end of 2025. The company should have two fully devoted battery plants up and running by the end of next year, with over 1 million EVs produced annually in North America in 2025.
What's more, GM has a sizable presence in China, the world's No. 1 auto market. General Motors has sold 2.9 million vehicles in back-to-back years in China, and should have the opportunity to gobble up market share in China's still-nascent EV industry.
Bank of America
The fourth Warren Buffett stock that can be bought hand over fist and never sold is financial juggernaut Bank of America (BAC -0.13%). To keep with the prevailing theme of this list, short-term recessionary concerns should take a back seat to BofA's numerous long-term advantages.
The beauty of bank stocks is that they benefit from the natural expansion of the U.S. economy. The disproportionate amount of time the economy spends expanding, relative to contracting, allows Bank of America to grow its loan portfolio and deposits, which boosts its net-interest income over the long run.
Something else worth noting about Bank of America is that it's the most interest-sensitive money-center bank. With the Federal Reserve aggressively hiking interest rates in order to tame inflation, outstanding variable-rate loans are becoming more profitable for banks and credit unions without them having to lift a proverbial finger. Since the federal funds target rate is coming off an extended period where it was effectively at 0%, the implication is that BofA can expect a sizable uptick in net-interest income in the years ahead.
This is also a company that's done a phenomenal job of encouraging its customers to bank digitally. As of the end of June, 43 million active users were banking online or via mobile, with 48% of all sales being completed digitally. Because digital transactions are considerably cheaper than in-person and phone interactions for banks, this digital push has allowed BofA to consolidate some of its physical branches and reduce its noninterest expenses.
Berkshire Hathaway
The fifth and final Warren Buffett stock you can buy and never sell is (cue ironic music) ...Berkshire Hathaway. Over the past four years, there's no stock Warren Buffett has spent more money buying than his own company.
What makes Berkshire Hathaway such a rock-solid performer is Buffett's affinity for cyclical businesses and his love of dividend stocks.
As I've pointed to throughout this list, cyclical companies benefit from the substantially longer amount of time the U.S. and global economy spend expanding. Instead of trying to guess when these economic downturns will occur, Buffett has packed Berkshire Hathaway's investment portfolio with companies that thrive off the natural growth of U.S. and global gross domestic product over time. Tech stocks, financials (banks, insurers, and payment processors), and energy stocks (oil companies) all benefit immensely from extended bull markets.
Additionally, Berkshire Hathaway is on track to collect approximately $6.07 billion in dividend income over the next 12 months. Income stocks are usually profitable, have navigated their way through prior recessions, and offer an extensive history of outperformance when compared to their non-paying peers.
With Warren Buffett overseeing a 20.1% average annual return for his company's Class A shares over the past 57 years (ended Dec. 31, 2021), investors probably can't go wrong adding Berkshire Hathaway to their own portfolios.
