The Oracle of Omaha, as Warren Buffett is known, has an incredible track record as an investor, and he frequently offers words of wisdom to his many fans. Some of his recent moves have signaled that he thinks there could be a correction up ahead, but Berkshire Hathaway's portfolio is well constituted to manage through corrections, crashes, and other market upheavals.
If you're looking for some investments to shore up your own portfolio as the volatility on Wall Street intensifies, Amazon (AMZN 1.52%), American Express (AXP 1.39%), and Coca-Cola (KO 0.03%) are three great and resilient stocks that have also earned Buffett's stamp of approval.
1. Amazon: The growth stock
Amazon is an unusual Buffett stock. He rarely invests in tech companies and didn't pick Amazon himself; one of his investing directors did. However, he has admitted that he erred by not buying into the company much earlier. Berkshire Hathaway only opened its position in 2019.
Amazon is a global leader in two industries: e-commerce and cloud computing. It accounts for around 40% of U.S. e-commerce sales, and e-commerce still accounts for the majority of its total revenue. Cloud services are growing much faster, though, and that's where it's focusing its generative artificial intelligence (AI) developments.
NASDAQ: AMZN
Key Data Points
The AI opportunity is vast. The addressable market for AI is expected to increase at a compound annual growth rate of 36.6% from 2024 through 2030, according to a forecast from Grand View Research, and Amazon is well-positioned to benefit. CEO Andy Jessy has discussed his view on what's going to happen: He anticipates that generative AI will become a building block in almost every future application, like databases and storage are today.
Amazon is launching new products and upgrading its platform to provide all kinds of services for every type of business, and it has a long potential growth runway.
The stock has had its ups and downs, but it has been resilient, always bouncing back from turmoil even stronger. It is down by almost 10% so far this year, and trades at a forward, 1-year P/E ratio of 26. That's an excellent valuation for this growth stock.
2. American Express: The resilient value stock
Buffett has praised American Express for its global brand power and its dividend, and it fits the classic mold of his picks with its high profits and services that power the economy.
American Express is best known for its credit and charge cards, which are targeted toward an affluent clientele, but it also has a full-service online bank. It operates a closed-loop model, which means it doesn't partner with banks to provide the credit for its cards. Most of its cards charge notable fees, giving the company a reliable recurring revenue stream, and those fees go straight to its bottom line. And since its core customers are more affluent, their budgets are less susceptible to inflation or economic downturns, so they can spend even when the average U.S. consumer is under pressure.
NYSE: AXP
Key Data Points
That's how things have been playing out recently. In the fourth quarter, American Express' revenue increased 10% year over year, and earnings per share rose 16%. The company saw record card spending and booked record card fees, and it added 13 million new cardmembers.
American Express has pivoted its marketing focus somewhat to attract a greater number of younger customers, and these cardmembers will be key to unlocking future growth as their relationships with the company expand.
The stock is also down nearly 10% year to date, and it trades at a forward, 1-year P/E ratio of 15. That's an excellent price to pay for a strong value stock with loads of potential.
3. Coca-Cola: The Dividend King
In contrast to the other stocks on this list -- and to the broader market -- Coca-Cola is up this year, by a smashing 16%. That's a reflection of one of the reasons Coca-Cola is a compelling stock to own despite its lackluster longer-term performance. It helps cushion portfolios against turbulence since it's a "safe" stock that investors flock to when they dump riskier investments.
Coca-Cola is a Dividend King with a 62-year streak of annual payout hikes. That's an almost unbeatable track record. Between the reliability of demand for its popular beverages and the reliability of its dividend, investors can count on Coca-Cola under all kinds of circumstances.
In the fourth quarter, the company's unit case volume increased 2% year over year, but revenue increased 6%. That speaks to Coca-Cola's incredible pricing power, which in turn speaks to its strong brand and resilient business.
Coca-Cola can be an excellent anchor stock in a portfolio, providing security when the market is volatile and passive income all the time.
