Among investors, few names command as much respect as Warren Buffett. His time-tested strategies and relentless focus on long-term value have made him an icon in the financial sphere. So why not learn from the best?
Drawing from his investing wisdom, let's examine two stocks that already have caught Buffett's attention and could bring lasting rewards to your portfolio, too. Read on to see why Buffett's Berkshire Hathaway (BRK.A -0.76%) (BRK.B -0.69%) has invested billions of dollars in these two names and why you should consider following suit.
I'm not saying you absolutely have to follow in Buffett's footsteps -- his investing goals are different than yours. But after all, he's a legend for a reason. I can think of nearly 8 billion people who would be worse role models for aspiring investors.
Buffett pick No. 1: Amazon
Warren Buffett has long seen a kindred spirit in Amazon (AMZN 3.43%) founder and chairman Jeff Bezos. The Oracle of Omaha has pointed out that Bezos is a genius at converting opportunity into business results -- usually based on other organizations' capital investments.
Amazon would not have been possible without the internet, the delivery systems of the postal service and other carriers, the remote payment services of credit and debit cards, and so on. All Bezos did was take advantage of these amazing resources in a new company with ambitious long-term dreams.
Buffettologists, of course, see the master-investor's reflection in that situation. After all, he's known for turning a profit from investing other people's money. Jeff Bezos simply approached that central idea from a different angle.
Buffett stopped kicking himself about the Amazon opportunity in 2019 and picked up nearly 11 million shares (adjusted for last-year's 20-to-1 stock split). That's a $1.1 billion investment at current share prices.
Most of us can't make that kind of financial commitment, but a little goes a long way. If you thought Amazon's growth story has played out already, I've heard that bearish story many times while Amazon's business kept soaring and shareholders pocketed enormous long-term gains.
If you invested $10,000 in Amazon 20 years ago, you'd be a millionaire now. And critics announced the end of Amazon's growth trajectory at pretty much every point along the way:
Of course, past results don't guarantee future gains, but Amazon is only getting started. Here's just a small sample of Amazon's most obvious growth opportunities today:
- About 80% of retail sales are still happening in physical stores, not online. Amazon wants to flip that ratio the other way around.
- 75% of last-year's sales came from the domestic market. It's a big world out there, and Amazon is only nibbling on the global growth opportunity so far.
- Oh, you know how everyone and their uncle are talking about artificial intelligence (AI) these days? Amazon has been automating its warehouses with machine learning for decades already, is a leading provider of cloud-based AI tools for other companies, and is currently thinking about how its AI expertise can deliver money-making consumer services. Stay tuned as this story develops.
Buffett has a solid foundation for his billion-dollar Amazon investment. The stock is also an excellent buy for mere mortals like you and me.
Buffett pick No. 2: Visa
Just as Warren Buffett found immense value in Amazon's ability to capitalize on existing resources and market trends, he also recognized the potential of Visa (V -0.23%), the global payments giant. The Oracle of Omaha appreciates the company's strong competitive position, predictable earnings, and ability to generate cash flow, making Visa a top Buffett stock.
Visa has shown impressive growth. Its split-adjusted stock price rose from $21.43 per share in 2011, when Buffett started his position, to $233 today.
While the rise of cryptocurrencies and decentralized finance could have been a threat to traditional payment processors, Visa has displayed remarkable adaptability. The company is already integrating crypto solutions into its services, ensuring it remains at the forefront of the rapidly evolving payment industry.
Visa has a firmly established vision for supporting digital currencies, and you must love the company's commitment to innovation in the face of financial disruption. By partnering with over 65 crypto-wallet providers, developing native digital-currency settlement solutions, and more, Visa is actively embracing the crypto-based future of payments.
As for Warren Buffett, his Visa investment makes all kinds of sense. First, the master investor is deeply engaged in financial services, so he knows Visa's industry like the back of his wallet. And Visa isn't just any old bank -- it has been a sector-leading innovator for decades.
The company boasts a solid competitive position in the market and demonstrates a willingness to evolve and grow in response to emerging trends. With Visa's dedication to staying ahead in the rapidly changing world of payments, it's no wonder Buffett sees this stock as a top pick to buy and hold for the long haul.
Amazon and Visa highlight two top Buffett stocks well-positioned for long-term growth and success. Both companies demonstrate strong competitive positions, adaptability, and a commitment to innovation, making them ideal investments for those looking to follow in the footsteps of the Oracle of Omaha.
