Each quarter, Warren Buffett's Berkshire Hathaway (BRK.A -0.76%) (BRK.B -0.69%) is required to release a 13F. This filing with the Securities and Exchange Commission (SEC) reveals any purchases or sales Buffett made in the Berkshire stock portfolio during the previous quarter.
Buffett's 13F filings are closely watched, as investors want to know what the Oracle of Omaha has been up to. It's important for investors not to make any trading decisions based on what Berkshire did, but the filing is interesting nonetheless.
Looking at the most recent 13F, there are three companies in particular that I think are no-brainer buys right now -- and it's not simply because Buffett owns them. Let's dig in and see why.
1. Bank of America
When it recently reported its Q2 2023 results, Bank of America (BAC -0.21%) demonstrated once again why it's one of the leading banks in the world and a favorite of Warren Buffett. Revenue increased by 11% to $25 billion, while earnings per share grew by 21% to $0.88. Both of these results beat analysts' expectations.
Bank of America's strength is in its diversified banking and investment offerings, particularly for consumers. The company added approximately 157,000 new checking accounts in Q2, marking the 18th consecutive quarter of growth in this category and demonstrating the power of the Bank of America brand in attracting new customers.
As interest rates have increased, Bank of America has benefited. Because it pays relatively low interest to its customers, it can make more money on its investments as rates rise without the pressure to raise the interest it pays its customers. In Q2 2023, Bank of America's net interest income grew by 14%. This makes Bank of America stock particularly attractive in higher-interest rate environments.
2. Apple
The big news with Apple (AAPL -0.35%) recently has been the announcement of its new mixed-reality device, the Vision Pro. This product has been rumored for years and marks Apple's first step into the world of immersive computing, mixing the real world with the digital world through the use of a pair of goggles.
Buffett has owned Apple stock for years, and he has publicly praised the company and its CEO Steve Jobs on several occasions. The purchase may have been surprising at the time, but it makes sense when you think about Buffett's preference for strong brands, reliable earnings, and competent management.
Apple also has another quality that Buffett enjoys as an investor in the company, and that's the return of capital to shareholders. Over the last 10 years, Apple has repurchased its own shares at an impressive pace, reducing its shares outstanding by more than 37% over that time frame.
In fact, in his 2021 annual letter to shareholders, Buffett explained how powerful share repurchases have been to Berkshire Hathaway's investment portfolio. Buffett stated that Apple's ownership increased by $160 million from share repurchases alone.
3. Johnson & Johnson
Another company in Buffett's portfolio with strong brand recognition is healthcare giant Johnson & Johnson (JNJ -0.46%). Ironically, the consumer health part of the business -- where products like Band-Aids helped J&J become a household name -- is no longer part of the company. Recently, Johnson & Johnson spun off its consumer business as a stand-alone company called Kenvue.
Even without its iconic consumer health brands, J&J is still worthy of Buffett's portfolio. What remains after the spinoff are very successful medical device and pharmaceutical segments. In Q2 2023, these segments posted year-over-year revenue growth of 13% and 3%, respectively. These strong results led management to increase its full-year guidance for both revenue and earnings per share.
Of particular interest to investors should be J&J's pipeline of pharmaceuticals. The company has 10 products in phase 3 trials and another six in phase 2. The progress being made in this pipeline has management guiding for $57 billion in pharmaceutical sales in 2025. This is important because as older products lose their exclusivity patents, the company will need new products to come to market and replace potential lost revenue.
