Berkshire Hathaway CEO Warren Buffett has famously said that his holding company's preferred duration for holding a stock is "forever." Finding stocks that are worth holding ultra-long term is no easy task, but it's a guiding principle that has yielded tremendous results for the Oracle of Omaha and his conglomerate.
With Buffett's incredible, market-crushing track record in mind, here are two stocks in the Berkshire Hathaway portfolio that are worth buying now and owning for the long haul.
1. Taiwan Semiconductor Manufacturing Company
Taiwan Semiconductor Manufacturing (TSM +1.58%), better known as TSMC, stands as the world's largest fabricator of high-performance semiconductors. While plenty of other companies vie for design wins and performance edges in various corners of the semiconductor industry, no other player comes close to matching TSMC when it comes to actually manufacturing chips. Even leading chip designers that boast substantial fabrication capabilities such as Intel and Samsung turn to TSMC to help them meet some of their semiconductor manufacturing needs.
NYSE: TSM
Key Data Points
Chips have never been more important to the global economy, and it's hard to imagine a future in which demand will wane for these crucial hardware components. While the growth of cloud computing and data centers has reshaped both the technology industry and other industries that depend on and benefit from the related services, these big leaps forward have been enabled -- at a fundamental level -- by high-performance semiconductors.
Artificial intelligence, 5G and other next-generation networking services, electric vehicle engines, self-driving vehicle technologies are just a handful of the major technological trends that are being driven in part by advancements in semiconductor hardware. And TSMC has advantages of scale, technology, and infrastructure that make it the absolute go-to when companies need chips produced that will deliver top performance and reliably be ready to go on schedule.
TSM PE Ratio (Forward) data by YCharts.
TSMC trades at a reasonable-looking 13 times expected earnings, and also pays a dividend that yields roughly 2.4% at the current share price. While the semiconductor industry has historically been shaped by cyclical trends, strong demand catalysts have been making its growth more consistent, and that will likely continue to be the case for the foreseeable future.
The world runs on semiconductors, and TSMC is arguably the most important company in that industry by far. For investors seeking ways to benefit from the long-term growth of the technology sector and the global economy at large, following Buffett's lead on this stock could be a great move.
2. Paramount Global
Berkshire Hathaway added to its position in Paramount Global (PARA +0.00%) in 2022's third quarter, signaling that Buffett and his team believed that the media company presented one of the best risk-reward profiles on the market. With the stock trading at roughly 4 times last year's earnings and 14 times expected earnings, Paramount Global looks to be a classic, Buffett-style value play right now.
NASDAQ: PARA
Key Data Points
Paramount Global is a diversified media company that houses a theatrical film unit, licensing businesses, and an array of broadcast, cable, and premium-subscription TV networks that includes CBS, Showtime, MTV, Nickelodeon, and Comedy Central. The company is also making a big push into the streaming space with its Paramount+ service.
Paramount+ added 4.6 million subscribers and grew its revenue by 95% year over year in the third quarter. The company ended the period with 46 million Paramount+ subscribers and nearly 67 million total global direct-to-consumer video subscribers.
Paramount also owns Pluto TV, the leading free, ad-supported streaming service in the U.S. That service has seen ad sales decline recently in the face of a tougher economic backdrop for the advertising industry. With further macroeconomic headwinds on the horizon, advertising spending in both the cable and streaming spaces will likely face continued pressure, but Paramount appears to have a strong enough core business to make it through tough times, positioning it to thrive when more favorable operating conditions prevail.
The media company will likely face some challenges in the near term, but the stock also looks attractively valued for long-term investors. With Paramount Global valued at roughly $12.1 billion and rapidly gaining ground in the streaming space, it could deliver strong returns for investors who take a buy-and-hold approach.
