Over the past several decades, Warren Buffett and his company, Berkshire Hathaway (BRK.A 0.50%)(BRK.B 0.44%), have achieved some of the most impressive feats in the stock market. Buffett's name has become synonymous with stock market success, and Berkshire has become a trillion-dollar company.
Looking at their success, it's easy to see why people would want to follow their investing moves. Berkshire's stock portfolio is filled with dozens of high-quality companies, but there are four that overwhelmingly make up the bulk:
| Company | Number of Shares Owned | Percentage of Portfolio |
|---|---|---|
| Apple (AAPL 0.49%) | 280,000,000 | 24% |
| American Express (AXP +0.25%) | 151,610,700 | 17.4% |
| Bank of America (BAC +0.21%) | 605,267,375 | 10.2% |
| Coca-Cola (KO 1.35%) | 400,000,000 | 8.9% |
Data source: Berkshire Hathaway 13F filing. Holdings as of June 30.
It makes sense to assume that since Berkshire has such a large part of their portfolio in these stocks, it's a strong believer in them. However, for the average investor, are these four stocks a buy right now? Well, let's take a look.
1. Apple
While other big tech stocks have experienced high growth over the past few years thanks to advances in artificial intelligence (AI), Apple's stock has lagged behind because of its seeming lack of AI development compared to those companies. Over the past 12 months, Apple's stock has underperformed the S&P 500.
That said, Apple is still the king of consumer tech hardware, and it has the brand loyalty that has kept its customers around despite no real groundbreaking new products. But even beyond hardware, Apple's full ecosystem is becoming broader and stickier, making its products and services the go-to for consumers who already own an Apple device.
NASDAQ: AAPL
Key Data Points
In its fiscal third quarter (ended June 28), Apple's total revenue, iPhone revenue, and earnings per share (EPS) reached record highs for the period, and its services revenue set a new all-time high. Despite its current underwhelming performance, Apple remains a buy.
2. American Express
American Express (Amex) has built its business and brand on exclusivity and premium service, attracting affluent customers with its perks and reputation for reliability.
Amex stands out from other credit card companies because it operates on both sides of the coin: It issues its own cards and runs its own network. Credit card companies like Visa and Mastercard, on the other hand, only operate the network but rely on banks to issue cards. This allows Amex to capture fees from merchants and cardholders.
NYSE: AXP
Key Data Points
Amex's rising fees have drawn a lot of pushback (nobody likes price increases), but the company has been intentional about ensuring its value proposition and benefits match -- or ideally exceed -- these fee increases.
One reason I consider Amex a buy right now is its success with millennials and Gen-Z. These are generations that are driving a lot of Amex's growth, and considering their relative young age, it's a chance for Amex to capture significant lifetime value from these cardholders.
3. Bank of America
Bank of America is the second-largest bank in the U.S., but the No. 1 in retail banking. It leads all U.S. banks in consumer deposits (around $1.2 trillion), has around 69 million consumer and small business clients, and 96% of the Fortune 1,000 companies are served by its global banking business.
Bank of America has a somewhat cyclical business, flourishing when interest rates rise and facing pressure when loan demand softens. However, it has undoubtedly reached "too big to fail" territory because of its deep integration into the U.S. and global financial systems. That alone is not a good enough reason to invest in the stock, but it definitely adds a layer of security and stability.
NYSE: BAC
Key Data Points
Overall, when you invest in Bank of America's stock, you know you're investing in one of the most profitable, well-diversified banks in the world. It also has a dividend yield routinely above the S&P 500 average, providing reliable income. That makes it a good choice for long-term investors.
4. Coca-Cola
Coca-Cola is one of Berkshire's oldest holdings, and I'd bet that the company holds on to the stock for quite some time. Buffett has been quoted as saying that Berkshire's "favorite holding period is forever," and Coca-Cola's business makes that easy.
The beverage titan has a top-tier brand, unmatched distribution, and products that sell regardless of economic conditions. All three of those play into Buffett's preference for companies that generate steady cash flow and have a long-lasting competitive advantage. There's no clear path for any competitor to overtake Coca-Cola as the king of non-alcoholic beverages.
As a dividend king (a company with at least 50 consecutive years of dividend increases), Coca-Cola has one of the most reliable dividends on the stock market. I wouldn't invest expecting market-beating returns year in and year out, but it's a great income stock to have in your portfolio.
