Legendary investor Warren Buffett is no longer the CEO of Berkshire Hathaway, but his investing methods and advice will live on through his many wise statements and actions. And while the makeup of the Berkshire Hathaway portfolio may change over time, he has shaped the company over the past six decades, and he leaves a legacy that will continue to leave its mark on the company's future.
Buffett's favored companies share several traits in common, and one that stands out is a model that can last over time and withstand changing trends. Coca-Cola (KO 0.03%), American Express (AXP 1.39%), and Domino's Pizza (DPZ +0.68%) are three stocks that have "forever" models, and they're excellent stocks to buy now and hold for many years.
Image source: The Motley Fool.
1. Coca-Cola: Quenching thirst for generations
Coca-Cola is the longest-held stock in the Berkshire Hathaway equity portfolio. It's the stock Buffett was talking about when he said his favorite holding period is forever, and he has said several times that he would never sell it.
Now that Buffett is no longer at the helm of Berkshire Hathaway, there's a chance that the company could sell it off. But if it continues to subscribe to Buffett's core beliefs about what makes a great company, Coke stock is likely to stay in the portfolio.
Buffett loves companies that have been around for a long time and have stability. It's even better when they have a product that everyone needs, a brand customers love, and continued opportunities to play a role in the U.S. and global economy.
NYSE: KO
Key Data Points
Coca-Cola has all of these features. It's been around since 1886, and fans worldwide love its refreshing taste and brand. But what makes Coca-Cola stand out from other types of companies, and what it has in common with American Express and Domino's, is that people will always need its products. The annals of corporate history are littered with the remains of once-great companies whose premier products, once the height of their industries, were overtaken by new technology.
People will always need to drink, and Coca-Cola has a beloved formula to quench thirst. It has built up an impressive portfolio of popular beverages that delighted customers will always need, and that gives Coca-Cola staying power over time.
Coca-Cola may not be a high-growth company, but it provides grounding for an individual stock portfolio and a hedge for rough times. If the market crashes in 2026, Coca-Cola is a "safe stock" investors will turn to, and it pays its rock-solid dividend under extremely adverse conditions.
2. American Express: Financial services for the affluent consumer
American Express is even older than Coca-Cola, having gotten its start in 1850. It provides a range of financial management services, although it's known mostly for its credit card business. It has carved out a niche in its space by targeting an affluent clientele, and it has shifted over decades to keep meeting the changing needs of its target population.
Today, it has a robust, fee-based, premium credit card model that's attracting younger affluent customers. It also has a full digital bank that offers a large array of online services, and it also has a focus on business banking. These are services that everyone needs and will always need, and American Express is upgrading its technology to serve its customers.
NYSE: AXP
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Because it remains relevant and grows with the economy, American Express is still growing by double digits despite its more than a century and a half of operation. Revenue increased 11% year over year in the third quarter, with accelerated card member spending. American Express recently refreshed its exclusive Platinum card and had its strongest-ever start for a U.S. platinum card refresh, demonstrating that American Express is only increasing in relevance.
As more high spenders sign up, more merchants sign up to be a part of the story, creating a positive cycle and ensuring that American Express will continue to be relevant for many years.
3. Domino's: Everyone eats pizza
Domino's is a recent Berkshire Hathaway purchase, but it fits right into the portfolio. It's the largest pizza shop chain in the world, with more than 21,000 shops and growing.
Like the other companies on this list, Domino's is the leader in an industry that will always have high demand and cannot be easily replaced. While new restaurant concepts sprout up all the time, pizza is easy to make, with a formula that's simple to replicate in new shops. On top of that, Domino's works predominantly with a franchise model, which means it's not actually selling pizza; it's selling franchises, which is a low-cost, high-margin business.
NASDAQ: DPZ
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Technology won't replace pizza, but Domino's is using technology to build a better business. It recently rolled out a new e-commerce platform that makes it easier to order, and it's already resulting in higher conversions.
Pizza is also a great bet when there's inflation and economic pressure; people will cut down on eating out, but pizza will remain affordable for many.
Domino's stock trades at a P/E ratio of 24, below the three-year average of 27, so it looks attractive right now. It pays a growing dividend, like Coca-Cola and American Express, and it could protect your portfolio in the case of stock market volatility this year, as well as reward you long term.
