Warren Buffett is known as a buy-and-hold investor. However, he doesn't always hold stocks for very long. Some simply don't have what it takes to meet the continued expectations of the Oracle of Omaha.
The ones that do, though, can go on to deliver ginormous returns. Which Buffett stocks are the best picks for investors to buy for the long haul? I think that these three especially stand out.
1. Apple
There's a strong case to be made that Apple (AAPL +2.59%) ranks as Buffett's favorite stock in Berkshire Hathaway's (BRK.A 0.16%) (BRK.B 0.10%) portfolio. It's the biggest Berkshire holding, by far.
Buffett also clearly loves Apple's business model and its management team. He told CNBC earlier this year that Apple is "a wonderful business" and that CEO Tim Cook is "one of the greatest managers" in history.
NASDAQ: AAPL
Key Data Points
Apple's iPhone-centered ecosystem is arguably the best reason to buy and hold the stock. The company can count on regular recurring sales as customers upgrade to new iPhone versions. The services surrounding the iPhone, including the App Store and Apple Pay, are especially important growth drivers.
Every now and then, Apple also hits a home run with the launch of a new product. Its Apple Watch has been a smashing success story. While the jury is still out on the recently introduced Vision Pro mixed-reality headset, it won't be surprising if the device ultimately becomes a big winner, too.
2. Amazon
No, Buffett didn't actually make the call to add Amazon (AMZN +0.26%) to Berkshire's portfolio. He stated in 2019 that either Todd Combs or Ted Weschler decided to buy the stock. However, Buffett also admitted that he was "an idiot" for not investing in the company sooner.
Amazon stock has skyrocketed more than 50% year to date. I think it still has plenty of room to run over the long term.
NASDAQ: AMZN
Key Data Points
The company is best known to most Americans for its e-commerce platform. Amazon should have significant growth potential ahead, considering that e-commerce makes up only around 15% of total retail sales in the U.S. The company's supply chain gives it a huge competitive advantage in this market.
But the biggest opportunity for Amazon is in the cloud. Its Amazon Web Services (AWS) unit is the biggest cloud services provider in the world. The boom in artificial intelligence (AI) should also provide a major catalyst for AWS for years to come.
3. Johnson & Johnson
Johnson & Johnson (JNJ 0.11%) used to be one of Buffett's favorite stocks. The healthcare giant made some mistakes several years ago, though, that caused Buffett to nearly -- but not quite -- give up on it.
However, Johnson & Johnson is one of the most resilient stocks in Berkshire's entire portfolio. The company has survived and thrived for 137 years.
NYSE: JNJ
Key Data Points
Aging demographics serve as a key long-term tailwind for Johnson & Johnson. As populations in the U.S. and other large countries get older, the demand for prescription drugs and medical devices will almost certainly increase. J&J is one of the biggest players in both markets.
Don't forget the importance of dividends to total returns. Over the last three decades, Johnson & Johnson's share price has grown by a factor of 15x. However, including reinvested dividends in the mix more than doubled J&J's total return during the period.
That dividend is likely to grow, too. Johnson & Johnson is a Dividend King with 61 consecutive years of dividend increases. I fully expect the company will keep that impressive streak of dividend hikes going for a long time to come.
