Warren Buffett is one of the most closely followed investors in the world. Six decades ago, his fledgling fund acquired the struggling textile maker Berkshire Hathaway (BRK.A 0.35%) (BRK.B 0.58%). Buffett subsequently shut down Berkshire's textile business and transformed it into a diversified conglomerate with subsidiaries across the insurance, railroad, energy, and consumer staples sectors. Those subsidiaries generated plenty of cash for building Berkshire's investment portfolio.
Today, that portfolio is worth $276 billion and holds positions in 44 stocks. Many investors follow those stocks for investment ideas, but they're mostly conservative blue chips that won't skyrocket over the next few months.
Berkshire Hathaway CEO Warren Buffett. Image source: The Motley Fool.
If you can tune out the near-term noise and want some Buffett-backed stocks to hold for the long haul, you should consider investing in these three evergreen plays: Amazon (AMZN +0.13%), Visa (V 0.41%), and Chubb (CB 1.22%). All three companies dominate their respective markets with very wide moats.
1. Amazon
Amazon, the world's largest e-commerce and cloud infrastructure company, accounts for 0.70% of Berkshire's portfolio. It initially bought Amazon stock in the first quarter of 2019, and it now holds $1.98 billion worth with an average purchase price of $84.20. That investment has more than doubled in value over the past six years.
NASDAQ: AMZN
Key Data Points
From 2019 to 2024, Amazon's revenue grew at a compound annual growth rate (CAGR) of 18% as its EPS rose at a CAGR of 37%. It logged impressive growth even as it weathered the pandemic, inflation, and other macro headwinds.
Amazon grew by expanding its e-commerce marketplace, locking more shoppers into its Prime subscriptions, and serving up more remote computing power and storage through its Amazon Web Services (AWS) cloud infrastructure platform. It usually subsidizes the growth of its lower-margin e-commerce business with AWS' higher-margin revenues, and that strategy gives it a formidable advantage against other retailers.
Amazon's scale should keep it ahead of its e-commerce and cloud competitors. It should also profit from the growth of the AI market, which will drive more companies to upgrade their cloud infrastructure to handle the latest AI services.
2. Visa
Visa, the world's top card payments processor, accounts for 1% of Berkshire's portfolio. It started buying Visa in the second quarter of 2011, and it now owns $2.75 billion in shares with an average purchase price of $52. That's a six-bagger gain in 14 years.
NYSE: V
Key Data Points
From 2011 to 2024, Visa's revenue and EPS increased at a CAGR of 11% and 19%, respectively. Like Amazon, Visa kept growing through several economic downturns.
Visa's business is resilient because it doesn't issue any cards or take on any debt. Instead, it only partners with banks and other financial institutions to issue co-branded cards. Those partners handle all the accounts and customer debt, while Visa only charges "swipe fees" of 1.5%-3.5% for every transaction processed on its network.
Visa and Mastercard share a near-duopoly in that market, so merchants are usually willing to pay those fees to attract more customers. Both companies are facing pressure from businesses and government regulators to lower those fees, but they'll likely dominate the card-based payment market for decades to come.
3. Chubb
Chubb is the biggest publicly traded provider of property, supplemental, health, and casualty insurance policies. Berkshire started to invest in Chubb in the third quarter of 2023, and that $7.95 billion stake now accounts for 2.9% of its portfolio. It paid an average price of $221 for those shares, so it's already sitting on a 33% gain.
NYSE: CB
Key Data Points
Chubb's core operating income per share (excluding any tax benefits) grew 30% in 2023 and 13% in 2024. Its business was well insulated from inflation and rising interest rates, since its customers generally won't cancel their essential policies to save a few dollars. That's why its consolidated net premiums rose 13.5% in 2023 and 8.7% in 2024.
Chubb isn't an exciting investment, but it's a safe one to hold as the macro headwinds drive investors away from more consumer-driven and cyclical sectors. Moreover, Buffett notably increased Berkshire's exposure to Chubb even as it reduced its stakes in other top holdings like Apple and Bank of America while raising its cash and short-term Treasury holdings to record levels -- so Chubb could be a great way to ride out the near-term volatility and generate reliable long-term gains.
