When Warren Buffett gets something right, he really gets it right. The legendary investor's stock picks through the years have helped him become one of the wealthiest people on the planet.
But much of Buffett's success has stemmed from decisions he made a long time ago. What are examples of his best picks more recently? Here are Buffett's biggest winners over the past five years -- and whether or not they can keep winning in the future.
1. Apple
In his 2021 letter to Berkshire Hathaway (BRK.A 0.10%) (BRK.B 0.20%) shareholders, Buffett wrote that the conglomerate had "four giants." Three of them were Berkshire subsidiaries: the company's insurance businesses (including Geico and General Re), railroad operator BNSF, and energy provider Berkshire Hathaway Energy. But Berkshire doesn't control one of those giants -- Apple (AAPL +1.39%).
Currently, Berkshire owns only a 5.8% stake in Apple. However, the tech stock ranks as Berkshire's top holding by far, representing 38.8% of the total portfolio. Buying such a huge position in Apple has proven to be one of Buffett's smartest moves ever. The stock has skyrocketed around 240% over the past five years.
NASDAQ: AAPL
Key Data Points
It's no secret why Apple has delivered such a tremendous gain. The company's iPhone remains highly popular, especially with the shift to high-speed 5G networks. Apple's services business has also become a much bigger revenue driver in recent years.
2. Mastercard
Buffett has been a longtime fan of credit card stocks. Berkshire's portfolio includes American Express and Visa. The former ranks as Berkshire's No. 5 holding. But the biggest winner over the past five years has been Mastercard (MA +0.82%).
NYSE: MA
Key Data Points
Mastercard's gain of more than 125% is due in part to a broad-based shift away from cash. A sharp increase in e-commerce also provided a nice boost.
Despite Mastercard's status as one of Buffett's biggest winners in recent years, it's still not one of his favorite stocks. Berkshire reduced its position in Mastercard in the fourth quarter of 2021. Mastercard now makes up only 0.4% of Berkshire's total portfolio.
3. Moody's
Buffett technically didn't decide to invest in Moody's (MCO +1.37%). Berkshire owned shares of Dun & Bradstreet in the past. It received shares of Moody's when D&B spun off the credit rating business in 2000.
While Berkshire later sold its stake in D&B, it retained a position in Moody's. That turned out to be a wise move. The stock more than doubled over the past five years and has delivered more than a 20x gain since the spin-off from D&B.
NYSE: MCO
Key Data Points
However, Buffett could have made even more money from his investment in Moody's. He sold some of the stock in 2009. The Oracle of Omaha referred to this as a "billion-dollar mistake" less than two years later.
Can they win in the future?
None of these three stocks are performing very well so far in 2022. Only Mastercard is beating the S&P 500. But can these stocks win in the future? I think so.
Apple remains a great stock to buy for the same reasons it's made Buffett so much money in the past. Demand should continue to be strong for iPhones for a long time to come. Apple has opportunities to extend its smartphone dominance by introducing augmented reality applications.
Mastercard should benefit as digital payments replace cash in many cases. The company could especially profit as open banking (expanding interoperability between financial service providers) picks up momentum.
Moody's has a strong moat with its credit rating business. It also has significant growth potential for its analytics unit.
My view is that Apple, Mastercard, and Moody's should be big winners for Buffett over the next five years. And I think all three are good picks for investors who aren't worth close to $100 billion, too. Warren Buffett doesn't have to be the only person to really get it right.
