Berkshire Hathaway (BRK.A -0.28%) (BRK.B -0.68%) CEO Warren Buffett has famously said that his company's favorite holding period for stocks is "forever." Of course, finding investment opportunities that are worth holding for the ultra-long term is no easy task, but Buffett and Berkshire have an incredible track record on that front.
Thanks to strong leadership, a foundation of smart money-managing principles, and a series of fantastically successful investment moves that were given time to flourish, Berkshire Hathaway currently stands as the world's sixth-largest publicly traded company and sports a market capitalization of roughly $671 billion. Not too shabby, especially considering that Berkshire was a struggling textiles company when Buffett purchased a controlling stake in the business and became its chief executive back in 1965.
If you're looking to invest like the Oracle of Omaha, read on for a look at two Buffett-backed stocks that are worth buying and holding for the long haul.
Image source: The Motley Fool.
1. Apple
If you're ever wondering what Berkshire Hathaway's favorite stock is, a quick look at the equity positions disclosed in the company's 13F filings will clear things up quickly. The money does the talking. Apple (AAPL 1.27%) is by far Berkshire's largest equity position, accounting for roughly 41% of the company's total stock portfolio. For comparison, Bank of America stands as the investment conglomerate's second-largest holding and accounts for roughly 10.8% of the company's holdings as of this writing.
Of course, you can also look to Buffett's own words for confirmation of just how much Buffett loves Apple. The famous investor has described his company's equity position in Apple as Berkshire's third pillar (in addition to its insurance and railway subsidiaries), and he's said that the tech giant may be the single best business he knows of.
In addition to being a huge fan of Apple stock, Buffett is among the legions of devoted iPhone customers. In 2020, the Oracle of Omaha finally said goodbye to his trusty flip phone and embraced Apple's signature mobile device.
Apple basically pioneered the mobile market, and the company's incredible brand strength, much-loved penchant for design, and efficient manufacturing operations have allowed it to absolutely dominate the smartphone industry. Last year, the company captured an astounding 85% of total operating profits from worldwide smartphone sales. While that marked the company's best-ever share of global smartphone profits, it wasn't exactly a one-off performance either. Apple has essentially been the clear-cut leader in the category since the release of the first iPhone in 2007.
Through its dominance in mobile, contributions from other hardware products, and its expanding software-and-services ecosystem, the tech leader is one of the most profitable companies in existence. Even with the stock trading down roughly 19% from its high, Apple still stands as the world's largest company. And with its leading position in consumer electronics potentially paving the way for the company to expand into categories including augmented reality, smart cars, and new wearable hardware, it still has growth opportunities ahead.
2. Amazon
Once valued at roughly $1.9 trillion, Amazon's (AMZN -1.64%) market capitalization has been pushed down to a meager $951 billion. Tongue-in-cheek comments about the company's diminutive valuation aside, the e-commerce and cloud-computing leader still ranks as the world's fifth-largest publicly traded company.
But while Amazon is still a huge company even after recent sell-offs, it also remains a relatively small position in the Berkshire stock portfolio. As of this writing, Amazon stock accounts for just 0.3% of the investment conglomerate's total equity holdings, but it wouldn't be shocking to see the company increase its position in the tech stock in the not-too-distant future.
Berkshire last purchased Amazon stock in the second quarter of 2019, and the tech leader's share price is currently in roughly the same range at which Buffett's company made its last purchase. Facing macroeconomic pressures on multiple fronts, stock trades down roughly 50% from its peak, but there's a good chance it will eventually bounce back and go on to hit new highs. The tech titan's cloud-computing and digital-advertising businesses are still serving up solid double-digit sales growth, and the market may be severely underestimating profit potential in e-commerce.
Amazon's technology and infrastructure advantages will make it very hard for competitors to challenge it in the online retail industry, and the e-commerce business actually has the potential to become dramatically more profitable over the long term. Advances in artificial intelligence, robotics, and autonomous vehicle technologies will likely cut down warehouse and delivery expenses for the company's online business, paving the way for the e-commerce business to become a much more powerful earnings driver.
While economic slowdown may pressure the company's business segments, Amazon remains one of the strongest companies in the world, and it remains fantastically positioned for the long-term future.
