We'd all love to have Warren Buffett's investing track record -- increasing the value of our stocks by an annual average of about 20% over more than 50 years. You're probably not going to achieve quite that, but there are still ways you can invest kind of like the super-investor.
For starters, you might buy shares of his company, Berkshire Hathaway. It's not likely to grow quite as rapidly in the future as it has in the past, though, due to its massive size. Another option is to invest in some of the same companies that Berkshire Hathaway has invested in.
Here are three of the conglomerate's major stock holdings. Note that it's not necessarily Buffett himself who has decided to buy them, as he has two investing lieutenants, Ted Weschler and Todd Combs, who also call many shots.
1. Apple
Buffett long avoided tech stocks such as Apple (AAPL -2.19%), and he has said that the Apple buy was not his idea. He's certainly pleased with it, though -- as it's estimated that his cost basis in the stock is around $37.17 per share, and shares were recently trading around $150 apiece. Indeed, Berkshire recently owned nearly 5.5% of Apple -- which translates to a stake worth around $134 billion of a company recently worth $2.4 trillion!
Should you invest in Apple? It's hard to argue against the growth stock. All signs point to the company sticking around for a long time and continuing to innovate, as it does so well. It's enormous, but it can still grow at a respectable clip. In its fourth quarter, Apple posted revenue up 8% year over year to $90 billion, and up 8% from fiscal 2021 to fiscal 2022. It doesn't seem too overvalued at recent levels, either, with a price-to-earnings (P/E) ratio of 24.7, close to its five-year average of 24.1.
2. Taiwan Semiconductor
Taiwan Semiconductor (TSM -1.67%) is a newcomer to the Berkshire Hathaway portfolio, and since semiconductors are not one of the industries that Buffett knows best, this is likely another purchase by his carefully handpicked lieutenants. According to the latest report, it's already the 10th largest holding (Apple is by far the biggest), with a total value recently near $5 billion, representing about 1.16% of the company.
There are many semiconductor companies out there, but Taiwan Semiconductor is one of the few that actually manufactures them, instead of just designing them -- and it's the world's largest contract chipmaker. That has helped give it fat -- and generally increasing -- profit margins. In its second quarter, revenue surged 43.5% year over year, while net income and earnings per share soared 76%.
Shares were recently down 43% from their 52-week high and appear quite attractively priced, with a recent P/E ratio of 14.9, well below the five-year average of 23.5. Do remember that the company is cyclical -- and Taiwan-based, so it does carry some risks from its neighbor China.
3. Amazon
Amazon.com (AMZN -1.35%) is also a Berkshire Hathaway holding -- though not a huge one, at around 1% of Amazon. That's still a big stake, worth around $1 billion recently. It's easy to see why Buffett, or one or both of his lieutenants, would like Amazon. Not only does it have the dominant e-commerce destination, it has other valuable assets, such as its Amazon Web Services (AWS) cloud computing business. AWS also dominates in market share -- though it faces powerful competition.
The company's third-quarter report disappointed many investors, with a slowing growth rate due in part to inflation and rising interest rates. But the growth rates were only slowing to approximately pre-pandemic rates, and revenue still grew 15% year over year -- not too shabby for a company with a recent market value of $980 billion. Its long-term growth potential remains.
Amazon's shares were recently down 50% from their 52-week high, and appear attractively priced, with a recent forward-looking P/E ratio of 47, well below the five-year average of 75.
These are just a few of Buffett's and Berkshire's many stock holdings that you might consider for berths in your own portfolio. Each or all of them might help set you up for life, if they perform up to their potential.
