Warren Buffett is one of the richest people in the world. He built his fortune by investing in elite businesses with powerful competitive advantages and attractive long-term growth prospects.
If you are like many who think Buffett has the right ideas about stocks, you can invest alongside Buffett by buying shares of some of his favorite companies. He provides a regularly updated list of the stocks his company buys and sells.
Let's take a closer look at three of the largest holdings in Berkshire Hathaway (BRK.A +1.02%) (BRK.B +1.20%), the investment conglomerate that Buffett has built up into an $870 billion financial fortress. All three stocks are still excellent buys today.
1. Apple
Buffett (through Berkshire) has a massive stake in Apple (AAPL +0.61%). Berkshire owns roughly $160 billion worth of the tech titan's shares, which account for more than 40% of its $372 billion public stock portfolio.
NASDAQ: AAPL
Key Data Points
Buffett admires Apple's trusted brand, loyal customer base, and unrivaled profitability. He also appreciates how the iPhone maker's more than $100 billion in annual net income enables it to repurchase its own stock, which can boost earnings per share by reducing the amount of shares outstanding. In this way, Apple's hundreds of billions of dollars of stock buybacks help to increase the value of Berkshire's stake, along with those of its other shareholders. You could be one of those shareowners if you buy today.
Additionally, Buffett understands the value of the more than 2.2 billion Apple devices in use around the world. This enormous base of existing users provides Apple with ample opportunity to sell new devices and services. Products like the company's new Apple Vision Pro augmented reality headset are thus able to enjoy stronger initial demand and developer support than they otherwise would.
In fact, the tech titan's services segment has already blossomed into a high-margin, nearly $100 billion business. And it should continue to grow briskly, particularly as Apple unveils new artificial intelligence (AI) features as expected in the coming months.
2. Coca-Cola
Buffett has held shares in Coca-Cola (KO +1.15%) for far longer than he has Apple (1988 versus 2016). The beverage giant accounts for about 6% of Berkshire's $372 billion portfolio, a stake now valued at a whopping $23 billion.
NYSE: KO
Key Data Points
Coca-Cola is attuned to consumers' shifting preferences. With more shoppers seeking healthier alternatives, the soda king has broadened its product lineup to include more wholesome fare like milk, vitamin-enhanced water, juices, and tea. Fairlife, Bodyarmor, Minute Maid, and Gold Peak now stand among Coca-Cola's stable of successful brands.
The beverage titan's advertising expertise and vast distribution network enable it to quickly scale up new brands once it uncovers a hit product. Coca-Cola's innovation initiatives drove about a quarter of its gross profit growth in 2023.
The company's cost-cutting efforts are also boosting profits. Asset sales, such as management's decision to sell off the lion's share of Coca-Cola's lower-margin bottling facilities, contributed to its 13% earnings-per-share growth in 2023.
These profit gains enabled the dividend stalwart to increase its annual cash payout to investors for the 62nd consecutive year in February. Coca-Cola's shares are now yielding a solid 3.3%.
3. Occidental Petroleum
One of Buffett's most recent big bets is Occidental Petroleum (OXY 2.08%). Berkshire has been an aggressive buyer of the oil and gas producer's shares since 2022. The investment colossus owns a 28% stake in Occidental valued at roughly $17 billion, as well as over $8 billion of preferred stock and warrants that give it the right to increase its holdings in the energy company.
NYSE: OXY
Key Data Points
Berkshire helped to finance Occidental's purchase of Anadarko Petroleum back in 2019. The deal bolstered Occidental's assets in the Permian Basin and other oil- and gas-rich regions. The combined company's operations in the U.S. are now supplying reliable energy to its customers at a time when conflicts in the Middle East and Europe are disrupting international markets.
Buffett is also intrigued by the energy producer's leading position within the potentially multitrillion-dollar market for carbon management services. CEO Vicki Hollub believes Occidental's talents in enhanced oil recovery, which uses carbon dioxide to release more oil from mature fields, will give it an edge in the bourgeoning industry of carbon capture, utilization, and storage (CCUS).
Hollub intends to supply the technology that will allow its partners to build as many as 1,000 carbon capture plants around the world. Processes that can remove carbon dioxide from the air could serve an important role in battling climate change. ExxonMobil projects that the market for carbon capture solutions will reach a staggering $4 trillion by 2050. For her part, Hollub thinks Occidental will eventually generate more profits from its carbon management services than it does today from oil and gas.
