Warren Buffett has had a remarkable investing career. For 60 years, he guided Berkshire Hathaway (BRK.A +0.10%) (BRK.B +0.06%) to market-thumping returns, enough to have turned a $1,000 investment into $55 million.
While Buffett will be stepping aside at the end of this year, his timeless investment philosophy will continue to guide new leadership at Berkshire. Here are two stocks that can help you invest like the Oracle of Omaha.
Image source: Amazon.
1. Amazon
Berkshire Hathaway has held a stake in Amazon (AMZN +0.61%) since 2019 and still held 10 million shares in the first quarter. Amazon is a dominant business with more than $650 billion in revenue coming from online stores, cloud computing, advertising, and other services. The stock is trading at its lowest multiple of earnings in years, which makes it a no-brainer buy right now.
Amazon's total sales across all services grew 9% year over year in Q1. But the reason you should consider buying the stock is the company's opportunity to grow profits at higher rates with improved margins. Amazon's net income has tripled over the last three years as it squeezed more cost efficiency out of operations, and there's more to come.
NASDAQ: AMZN
Key Data Points
Amazon has more than 750,000 robots assisting employees at its warehouse facilities with finding, picking, and processing orders. This is driving significant gains in delivery speed and boosting the company's margins.
Robotics will get more advanced, where it can handle more tasks that require a human's touch. Amazon uses several types of robots for different tasks. Its Vulcan robot can pick and stow at about the same speed as an employee. Considering how early in the development of robotics the company is right now, Amazon could see tremendous productivity gains as this technology advances over the next few decades.
The potential margin gains from using automation across its e-commerce operations are not fully reflected in the stock's valuation. Amazon's earnings were up 62% year over year in the first quarter, yet the stock trades at 33 times trailing earnings -- the lowest multiple the stock has traded at in over a decade. This valuation should allow an investor buying shares today to realize returns on par with the company's future earnings growth.
Image source: The Motley Fool.
2. Berkshire Hathaway
While 2025 is Buffett's last year leading Berkshire Hathaway, he plans to remain the company's largest shareholder. He owns 37.9% of the shares outstanding, and his decision to keep holding every share reflects tremendous confidence in his successor.
Greg Abel will take over as CEO next year, and it's easy to see why he was the board's pick to take over for Buffett. Abel has served as vice chair of Berkshire's non-insurance operations since 2018. He became CEO of MidAmerican in 2008, which changed its name to Berkshire Hathaway Energy -- an energy holding company that generated $3.7 billion in operating profit last year.
NYSE: BRK.B
Key Data Points
Buffett built Berkshire Hathaway by acquiring businesses outright and buying partial ownership stakes through the stock market. Abel will continue Buffett's approach of allocating capital. In fact, Buffett sees the potential for Berkshire to prosper under Abel's watch.
"The decision to keep every share is an economic decision because I think the prospects of Berkshire will be better under Greg's management than mine," said Buffett at this year's annual meeting.
Berkshire holds a large equity portfolio worth $263 billion at the end of Q1, including large stakes in Apple, American Express, and Coca-Cola. It also owns a stable of outstanding businesses spanning retail, manufacturing, insurance, and utilities. Berkshire's operating profits across these businesses grew 27% last year to $47 billion.
Berkshire is also sitting on a lot of cash that is ready to deploy in new opportunities. It ended the first quarter with $342 billion of cash and short-term investments. Berkshire Hathaway is simply a rock-solid business that will stand the test of time and continue growing in value for years to come.
