Berkshire Hathaway CEO Warren Buffett's incredible market-beating track record is the stuff of legend. In fact, if you held a $1,000 stake in Berkshire Hathaway on the day that Buffett purchased the company in May 1965, that position would now be worth well over $26 million.
With that kind of performance, it's no surprise that many consider Buffett the single best investor in history. If you want to invest like Buffett, read on for a look at five stocks in the Berkshire portfolio that are worth buying and holding for the long haul.
Image source: The Motley Fool.
1. Amazon
Amazon (AMZN 2.98%) is one of the world's most influential companies. While it's virtually synonymous with e-commerce for many people, the serial innovator also spearheaded and maintained a forefront position in the cloud-infrastructure services market.
The tech leader also used its advantages in e-commerce and data services to build a strong position in digital advertising. It's the third-largest digital ads company by revenue in the U.S., behind only Alphabet and Meta Platforms. Strength across multiple business categories helped Amazon deliver incredible sales and profit growth the over the last decade.
While the company has faced valuation multiple compression and operating headwinds due to macroeconomic challenges, investors have an opportunity to buy Amazon stock at a price that could lead to stellar returns over the long term. Shares dropped roughly 48% from their peak level, but the company's core business pillars still look quite strong, and there's a very good chance that its stock will bounce back and go on to reach new highs.
2. Apple
Apple's (AAPL 0.45%) iPhone spearheaded the mobile-computing revolution in 2007. While it wasn't actually the first smartphone to market, it essentially defined the product category. It set the standard and laid the foundation for design and features that its competitors would quickly shift toward attempting to emulate. One thing competitors have never been able to imitate is Apple's big profit margins in the mobile space.
Apple cultivated an incredibly loyal base of customers who are willing to pay a premium for a premium product. This distinction helped the tech giant capture 80% of total global profits on smartphone sales.
Thanks in large part to its pricing power in the category, Apple is one of the most profitable companies in the world. With its hardware business providing a solid foundation, the company also built a highly profitable software and services ecosystem. There's a good chance it'll be able to continue branching into new hardware and software categories and driving profitable growth for years to come.
Apple is by far Berkshire's largest stock holding, accounting for roughly 42% of the company's equity portfolio.
3. Taiwan Semiconductor Manufacturing
Fortune Business Insights estimates that the global semiconductor market will have grown from roughly $573.44 billion in 2022 to roughly $1.38 trillion in 2029 -- representing a compound annual growth rate of 12.2% across the stretch. No company will play a bigger role in facilitating that growth than Taiwan Semiconductor Manufacturing (TSM 1.04%) -- or "TSMC," as it's often called.
TSMC is the world's largest fabricator of semiconductors, accounting for roughly 55% of the contract chip market and 90% of the market for high-performance chips. When companies -- including Nvidia, Advanced Micro Devices, and Apple -- need chips and processors, they turn to TSMC. Even Intel, which has substantial fabrication capabilities of its own, relies on the Taiwan-based fab leader for the manufacturing of some of its designs.
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Buffett and Berkshire are clearly bullish on the company's future. The investment conglomerate bought roughly 60 million TSMC shares in the third quarter, worth about $4.1 billion at the time that the position was disclosed. The purchase marked the first time that Buffett's company had invested in the chip giant, and the big buy immediately made TSMC Berkshire's 10th-largest overall stock holding.
4. Bank of America
Bank of America (BAC -0.07%) has come a long way since its troubled days following the 2008 financial crash, and Buffett played a big part in getting the company back on its feet and moving forward. Buffett played a key role in shaping the Troubled Asset Relief Program that helped save the banking system, and then guided Berkshire to make a $5 billion investment in BofA during the 2011 debt-ceiling crisis.
Through capital appreciation and additional stock purchases, Berkshire's Bank of America position is now worth more than $30 billion -- making it the investment conglomerate's second-largest overall stock holding by weight.
Bank of America has become a smarter, more effectively run company since Berkshire initiated its position. The company's recently published fourth-quarter results once again arrived with better-than-expected sales and earnings. Bank stocks tend to do relatively well in a high-interest-rate environment because they can charge more for lending, and BofA in particular looks well positioned for the long term.
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BoA also has appeal as a dividend stock. Its payout yields roughly 2.5% based on today's stock prices, and it has increased its payout roughly 83% over the last five years.
5. American Express
American Express (AXP -1.13%) is another financials stock that's beloved by Berkshire Hathaway. Buffett's company owns roughly 20% of AmEx, and the credit card player is the investment conglomerate's fifth-largest overall equity position.
American Express gears its credit card offerings toward a premium-oriented customer base, and it's managed to build and sustain exceptional brand strength thanks to membership reward perks and promotions.
As pandemic-related challenges eased and travel restrictions lifted, AmEx has been registering strong sales growth. Revenue net of interest expenses rose 24% year over year in the third quarter to reach approximately $13.56 billion, and the fact that the company gets a piece as spending increases also means it's a good stock for the current inflationary environment.
Between organic growth and stock buybacks, American Express has a dual engine for increasing earnings per share. Shares look attractively valued, trading at less than 15 times expected forward earnings. The stock also pays a dividend yielding roughly 1.3%.
