In this piece, we will take a look at the 12 best long-term stocks to buy according to Warren Buffett.
Warren Buffett, the most famous investor on Wall Street, needs no introduction, having generated billions of dollars for himself and investors for decades. Throughout his investment career that began in 1965, the ‘Oracle of Omaha’ has averaged annual returns of 19.8%, trumping a gain of 9.9% for the S&P 500 over the same period.
The market-beating performance has propelled Buffett to the top of the charts as one of Wall Street’s most revered and followed investors. His investment portfolio is always tracked as investors scan for potential market opportunities.
READ ALSO: 10 Best Debt-Free Penny Stocks to Buy Now and 10 Best Counter Cyclical and Defensive Stocks to Invest In.
Likewise, Buffett is one of the most successful investors in Wall Street’s history, having accumulated a fortune of $138 billion. His total assets might have been significantly higher if he hadn’t donated large sums to different charitable causes.
Market participants have always applauded his disciplined approach, which entails a long-term perspective. His investment firm has become the latest company to cross the $1 trillion mark on market cap, underlining Buffett’s impressive stock-picking skills. According to Cathy Seifert, Berkshire analyst at CFRA Research, the $1 trillion milestone is a testament to Buffet’s investment firm’s financial strength and franchise value.
Buffett’s investment strategy has remained constant throughout his career, focusing on the concept of value investing. The strategy focuses on identifying companies that are undervalued but have the potential to increase in value over time. Buffett seeks out companies with a lasting edge over competitors, like a well-established brand, high barriers to entry, and a large and loyal customer base, and he buys into them at a price that ensures a safety margin.
Likewise, the billionaire investor is well-known for his cautious stance on investing in high-risk, high-reward sectors like technology. Instead, he prefers to invest in more stable sectors such as retail, insurance, and finance. He is recognized for his commitment to long-term investments, holding onto companies for extended periods, and steering clear of frequent trading. This strategy enables him to benefit from the compound interest effect and allows the companies he invests in to mature and produce significant profits.
Buffett’s cautious approach is evidenced by the fact that his investment firm had over $180 billion in cash as of the end of the first quarter. The cash reserves were expected to swell to over $270 billion as of the end of June.
The cash reserves have been building up as the billionaire investor only invests in finding attractive deals with eye-popping returns. In a 2023 letter to shareholders, Buffett reiterated he did not see the possibility of eye-popping performance.
Buffett has consistently included dividend stocks in his portfolio, which is a strategy that has effectively generated consistent passive income. This year alone, his investments are projected to generate around $6 billion in dividend earnings.
Nevertheless, Buffett has also been in defensive mode in recent months, opting to reduce stakes in some companies. He has trimmed holdings by up to half in some tech giants, concerned by valuations getting out of hand after a year of gains fuelled by the artificial intelligence frenzy.
While valuations have gotten out of hand going by the blockbuster gains over the past year, there are still opportunities to unlock. With the US Federal Reserve poised to end its monetary easing spree with a cut of interest rates, equity is poised to receive a significant boost.
The best long-term stocks to buy, according to Warren Buffett, are companies well poised to benefit from interest rates dropping. Low interest rates make it easier for companies to access cheap capital to accelerate their operations, generating more shareholder value.
Our Methodology
To compile our selection of the best long-term stocks to buy according to Warren Buffett, we began by analyzing Berkshire Hathaway’s 13F portfolio and chose to highlight the stock holdings that have remained within the portfolio for at least 5 years. Next, we assessed the number of hedge fund investors associated with each stock, as of the end of the second quarter of this year. Finally, the stocks were ranked in ascending order based on the value of Warren Buffett stakes in the companies.
At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
12 Best Long-Term Stocks to Buy According To Warren Buffett
12. Liberty Latin America Ltd. (NASDAQ:LILA)
Warren Buffett’s First Major Purchase: 2018
Berkshire Hathaway’s Latest Investment Stake: $25.28 Million
Number of Hedge Funds Holding Stakes as of Q2: 15
Liberty Latin America Ltd. (NASDAQ:LILA) is a communication services company that provides fixed mobile and subsea telecommunication services. Its core business offers communications and entertainment services, including video, broadband internet, fixed-line, telephony, and mobile services to residential and business customers.
The communication services company delivered impressive second-quarter results, with revenues totaling $1.1 billion. The telecom firm saw a significant increase in its subscriber base, adding 62,000 new customers during the first six months of the year, excluding Puerto Rico.
Liberty Latin America Ltd. (NASDAQ:LILA) also disclosed an OIBDA of $763 million, marked by considerable expansion in Panama and Costa Rica. Although encountering obstacles in Puerto Rico, the company is set to resume its upward trajectory by pursuing strategic mergers with Million and investing in fiber and 5G technology.
Liberty Latin America Ltd. (NASDAQ:LILA) has also revealed its plan to buy back shares and expects to see an increase in earnings throughout its range in the coming year. The firm has engaged in major mergers and purchases, such as with Tigor in Costa Rica and DISH in Puerto Rico. These moves are a key part of Liberty Latin America’s approach to boost landline and mobile services and bounce back to profitability.
While trading at a forward price-to-earnings multiple of 15, the stock appears undervalued going by the communication services average P/E of 28.
By the end of this year’s second quarter, 15 out of the 912 hedge funds surveyed by Insider Monkey had bought a stake in Liberty Latin America Ltd. (NASDAQ:LILA). Mark G. Schoeppner’s Quaker Capital Investments owned the most significant stake, which was worth $44.60 million.
11. Charter Communications, Inc. (NASDAQ:CHTR)
Warren Buffett’s First Major Purchase: 2016
Berkshire Hathaway’s Latest Investment Stake: $1.14 Billion
Number of Hedge Funds Holding Stakes as of Q2: 48
Charter Communications, Inc. (NASDAQ:CHTR) is a communication services company that offers broadband connectivity and viable connections to residential and commercial customers. The company has entered into a strategic collaboration with Warner Bros. Discovery Inc. to integrate linear video with streaming services. While the company is staring at stiff competition in the broadband market, weighing on core subscriber growth, it is enjoying some success in expanding into rural markets.
Charter Communications is also benefiting from a government program to expand broadband access in rural areas and with its push into mobile. Charter Communications, Inc. (NASDAQ:CHTR) delivered better-than-expected second-quarter results as it benefited from higher demand for its mobile service. Earnings per share (EPS) totaled $8.49, as revenues increased by less than 1% to $13.69 billion.
Its revenue growth has been modest at 0.23% over the last twelve months, suggesting a stable yet slow-paced expansion in the company’s top-line performance. Revenue from its mobile service jumped 36.9% to $737 million. Internet service, the company’s biggest segment, posted a 1.3% revenue gain to $5.81 billion.
The company is actively working towards a major improvement in its EBITDA in the latter part of 2024, motivated by its planned measures to cut down on costs. These actions are expected to keep the EBITDA steady throughout 2025.
Charter Communications, Inc. (NASDAQ:CHTR) trades at a P/E ratio of 9.24, signaling potential undervaluation, considering stocks in the communication service sector trade at an average P/E of 28.
48 out of the 912 hedge funds part of Insider Monkey’s Q2 2024 database had bought a stake in Charter Communications, Inc. (NASDAQ:CHTR). Natixis Global Asset Management’s Harris Associates owned the biggest stake, which was worth $1.89 billion.
10. Mastercard Incorporated (NYSE:MA)
Warren Buffett’s First Major Purchase: 2011
Berkshire Hathaway’s Latest Investment Stake: $1.76 Billion
Number of Hedge Funds Holding Stakes as of Q2: 142
Mastercard Incorporated (NYSE:MA) is a financial services company that provides technology for processing transactions and other payment-related products and services. The company has established an expansion drive to bring over 1 billion people into the digital economy. In pursuit of this objective, the company has recently initiated numerous collaborations. In August, it introduced an Open Banking initiative designed to streamline lending processes by digitally verifying income and employment status.
Mastercard Incorporated (NYSE:MA) also unveiled a payment passkey service in India, enhancing security and accelerating the speed of payments. Additionally, the company u is pursuing new growth opportunities around cryptocurrencies by allowing people to send and receive crypto using Mastercard Crypto credentials
The payments company delivered solid second-quarter results as net revenues increased by 13% while adjusted earnings soared 24%. The growth was driven by robust consumer spending and growth in cross-border volume, supplemented by expansion in value-added services.
The robust economic foundations, a diversified business model supported by robust consumer spending, solid demand for enhanced services, and the ongoing transition to digital payment methods position Mastercard Incorporated (NYSE:MA) favorably in the market.
The company has always been one of the best long-term stocks to buy, according to Warren Buffett, owing to its impressive track record in rewarding investors. The company has paid dividends consistently for 19 years, affirming its ability to generate free cash flow. Its financial health is highlighted by its ability to cover interest payments with cash flows.
As of June 2024 end, 142 out of the 912 hedge funds part of Insider Monkey’s database were the firm’s shareholders. Mastercard Incorporated (NYSE:MA)’s largest hedge fund investor is Charles Akre’s Akre Capital Management due to its $1.78 billion stake.
Here’s what L1 Capital International Fund mentioned about Mastercard Incorporated (NYSE:MA) in its Q2 2024 investor letter:
“The share prices of Mastercard Incorporated (NYSE:MA) and Visa, both long term Fund investments, have both drifted down over recent months. There have been no dramatic developments, but there has been a general slight softening in the rate of growth of consumer spending in the U.S. and globally, a court decision rejecting Mastercard and Visa’s proposed settlement of a long-lasting dispute with U.S. merchants as well as other modest adverse regulatory developments. We continue to view Mastercard and Visa as two of the highest quality businesses in the world, and both are well placed to continue to deliver attractive, risk adjusted returns to shareholders over time.”
9. Visa Inc. (NYSE:V)
Warren Buffett’s First Major Purchase: 2011
Berkshire Hathaway’s Latest Investment Stake: $2.18 Billion
Number of Hedge Funds Holding Stakes as of Q2: 163
Visa Inc. (NYSE:V) is a payment technology company that operates a transaction processing network that enables authorization, clearing, and settlement of payment transactions. It is one of the oldest holdings in Buffett’s portfolio, given that the company is a leader in the payment sector. Given that millions and billions of Visa cards are being used worldwide and accepted at over 130 million merchant locations, the company boasts one of the most secured revenue bases.
Visa Inc. (NYSE:V) increasingly benefits from its large scale, as depicted by its solid fiscal Q3 2024 results. Revenue increased 10% year over year to $8.8 billion, while GAAP net earnings reached $4.9 billion or $2.40 per share, showing a rise of 17% and 20%, respectively, compared to the previous year.
The company is expected to deliver better-than-expected results heading into yearend as interest rates drop, therefore boosting consumer purchasing power. It remains one of the best long-term stocks to buy, according to Warren Buffet, as it is staring at a global market opportunity of $20 trillion that should allow it to generate long-term value.
Visa Inc. (NYSE:V) has expanded its tap-to-pay business to replace small cash transactions with credit card payments. It’s also targeting automated clearing house (ACH) payments to replace payments as part of its expansion plan. Amid the tremendous opportunity for growth, the stock trades at a price or earnings multiple of 25 while rewarding investors with a 0.73% yield.
For their second quarter of 2024 shareholdings, 163 out of the 912 hedge funds tracked by Insider Monkey had bought and owned Visa Inc. (NYSE:V)’s shares. Chris Hohn’s TCI Fund Management owned the biggest stake, which was worth $4.41 billion.
Here is what Aoris International Fund said about Visa Inc. (NYSE:V) in its Q2 2024 investor letter:
“Visa Inc. (NYSE:V) operates the world’s largest payments network, facilitating the movement of money between merchants, financial institutions, consumers, businesses, and governments.
The company is best known for enabling consumers to make debit and credit card payments. In the year to September 2023, 4.3 billion Visa cardholders made 213 billion transactions on its network, to a total value of US$12.1 trillion.
Compared to cash and cheques, which are still widely used around the world, Visa’s network is a more convenient, secure, and ubiquitous way for consumers to pay. Visa has invested to reduce friction and fraud in the payments experience, to the benefit of both merchants and consumers…” (Click here to read the full text).
8. VeriSign, Inc. (NASDAQ:VRSN)
Warren Buffett’s First Major Purchase: 2012
Berkshire Hathaway’s Latest Investment Stake: $2.28 Billion
Number of Hedge Funds Holding Stakes as of Q2: 36
VeriSign, Inc. (NASDAQ:VRSN) is a stock that diversifies Buffett’s holdings into the technology sector. It is a software infrastructure company that offers domain name registry services and internet infrastructure, enabling internet navigation for worldwide recognized domain names.
The company exited the second quarter with 351.5 million domain name registrations across all top-level domains. The milestone cemented the company’s revenue base as it generates fees from the domains annually. Holding a nearly monopolistic position in its sector, meticulous management of its operations, and a steady flow of cash income, the rationale for Buffett’s acquisition of Verisign remains fundamentally sound.
Between 2020 and 2023, VeriSign, Inc. (NASDAQ:VRSN) ‘s revenue grew at a compound annual growth rate (CAGR) of 6%, while its earnings saw a steady 4% growth. Its revenue and earnings are anticipated to rise by 5% and 1% in the current year. These growth rates affirm why it is one of the best long-term stocks to buy, according to Warren Buffett.
The company delivered another solid quarter, both operationally and financially, with revenue up by 4% to $387 million and operating income increasing to $266 million from $249 million as of last year’s same quarter.
It’s doubtful that the internet will soon disappear, and its significance to commerce. VeriSign, Inc. (NASDAQ:VRSN) ‘s core business of providing domains remains intact and should continue growing regardless of prevailing macroeconomics.
In the second quarter of 2024, 36 out of the 912 hedge funds part of Insider Monkey’s database were the firm’s shareholders. VeriSign, Inc. (NASDAQ:VRSN)’s largest hedge fund shareholder is Warren Buffett’s Berkshire Hathaway through its $2.28 billion stake.
In its Q1 2024 investor letter, Baron Asset Fund discussed VeriSign, Inc. (NASDAQ:VRSN) as follows:
“VeriSign, Inc. (NASDAQ:VRSN), a global provider of internet infrastructure and domain name registry services, manages the .com and .net domains. Shares of VeriSign declined because of continued weakness in new domain registrations, stemming largely from weaker demand in China. We believe that VeriSign maintains an exceptional competitive position and the contractual ability to raise prices. Longer term, we are encouraged by VeriSign’s opportunity to win the rights to administer the “.web” domain, produce substantial free cash flow, and generate attractive capital returns as it continues to prioritize share buybacks.”
7. DaVita Inc. (NYSE:DVA)
Warren Buffett’s First Major Purchase: 2011
Berkshire Hathaway’s Latest Investment Stake: $5 Billion
Number of Hedge Funds Holding Stakes as of Q2: 34
DaVita Inc. (NYSE:DVA) is one of Warren Buffett’s top investment plays in the healthcare sector. The company offers kidney dialysis, outpatient, hospital inpatient, and home-based hemodialysis services. It also operates clinical laboratories that provide routine laboratory tests for dialysis.
The company’s stock value rally over the past year can be linked to its strong performance in dialysis and associated laboratory services. The positive outlook, driven by a strong start to 2024 and significant business prospects, is anticipated to add to this trend.
DaVita Inc. (NYSE:DVA)’s worldwide market presence is consistently growing. This past year, the firm reached a deal to broaden its international activities into Brazil, Colombia, Chile, and Ecuador and extend its operations globally.
DaVita Inc. (NYSE:DVA) concluded the second quarter of 2024 with results surpassing expectations. The company’s total revenue increased to $3.2 billion, and profit margins were positive. The launch of dialysis facilities across the United States and the acquisition of facilities abroad were seen as positive developments.
The company has also raised its forecasts for its financial year 2024, affirming the underlying growth. The estimated earnings per share (EPS) for the entire year are expected to fall between $9.25 and $10.05, an increase from the earlier range of $9 to $9.80. While the stock does not offer dividends, it trades at a discount with a price-to-earnings multiple of 14.
Insider Monkey dug through 912 hedge fund portfolios for their second quarter of 2024 shareholdings and found 34 DaVita Inc. (NYSE:DVA) investors. Warren Buffett’s Berkshire Hathaway was the biggest shareholder through its $5 billion investment.
Here is what Ariel Global Fund said about DaVita Inc. (NYSE:DVA) in its first quarter 2024 investor letter:
“Leading provider of dialysis services, DaVita Inc. (NYSE:DVA) outperformed during the period following a top- and bottom-line earnings beat. DaVita is benefitting from cost saving initiatives, early signs of a normalization in patient growth trends on par with pre-pandemic levels, improved leverage and an aggressive share buyback program. The company also recently announced an expansion of its international operations in Latin America, presenting an attractive long-term growth opportunity. Furthermore, management provided a 2024 financial outlook which is well above consensus and anticipates favorable growth. In our view, we believe the market misunderstands the long-term clinical impact of glucagon-like-peptide-1 (GLP-1s) on dialysis and as such, DaVita currently trades at a significant discount relative to our estimate of its intrinsic value.”
6. Moody’s Corporation (NYSE:MCO)
Warren Buffett’s First Major Purchase: 2010
Berkshire Hathaway’s Latest Investment Stake: $10.38 Billion
Number of Hedge Funds Holding Stakes as of Q2: 59
Moody’s Corporation (NYSE:MCO) is an integrated risk assessment company that develops products and services to support risk management activities. It also offers credit research, credit models and analytics, economics data, and models.
Moody’s Corporation (NYSE:MCO) is one of the oldest and longest holdings in Buffett’s portfolio due to its near-monopoly position in the credit ratings business. Its competitive edge stems from a resilient business structure that sustains any business environment. This is because individual loans and corporate bond assignments tend to increase during a low-interest rate environment. The company gets more corporate risk management work when interest rates are high.
Moody’s Corporation (NYSE:MCO) has also established partnerships with MSCI, Zillow, and Google with the goal of broadening its market reach and improving its product range. Even though there are expected difficulties in banking and asset management, Moody’s remains hopeful about its Software-as-a-Service (SaaS) divisions and growth objectives over the next few years.
The credit rating firm has established a solid standing on employing sophisticated financial frameworks that are hard to replicate. Beyond these elements, its brand image, technological advancements in Software as a Service (SaaS), and ability to set high prices all play a role in its broad economic barrier. In 2021, it boldly raised the fees for its credit rating services, therefore strengthening its revenue base. The surge in borrowing during the pandemic led to robust demand, prompting businesses to pay the higher fees for the credit ratings.
Consequently, the company recorded a 7% revenue increase in the second quarter due to solid demand for Moody’s Corporation (NYSE:MCO) proprietary data and unique analytical insights. A significant increase in revenue of 18.56% in the past year shows the firm’s ability to boost its income effectively. The remarkable gross profit margin of 73.01% during this time underscores Moody’s effective management and dominance in the market. While the stock trades at a premium with a price-to-earnings multiple of 37, it is expected to go by robust growth while rewarding investors with a 0.71% yield.
For their Q2 2024 shareholdings, 59 out of the 912 hedge funds tracked by Insider Monkey had bought the firm’s shares. Moody’s Corporation (NYSE:MCO)’s largest hedge fund investor is Warren Buffett’s Berkshire Hathaway, owning $10.38 billion worth of shares.
5. The Kraft Heinz Company (NASDAQ:KHC)
Warren Buffett’s First Major Purchase: 2015
Berkshire Hathaway’s Latest Investment Stake: $10.49 Billion
Number of Hedge Funds Holding Stakes as of Q2: 43
The Kraft Heinz Company (NASDAQ:KHC) is another consumer defensive investment play in Buffett’s portfolio for generating value regardless of the prevailing economic condition. The company manufactures and markets food and beverage products. Its product line includes sauces, cheese and dairy products, meals, meats, and refreshment beverages.
Under the current leadership, The Kraft Heinz Company (NASDAQ:KHC) has sold off its underperforming brands to generate funds, bought brands with higher potential for growth, and rejuvenated its traditional brands by introducing new items and advertising efforts.
These approaches positioned it favorably for expansion in 2020 and 2021, as the COVID-19 pandemic increased consumer demand for packaged goods. It mitigated the challenges posed by rising inflation in 2022 and 2023 by incrementally increasing its prices.
Reducing operating costs enabled The Kraft Heinz Company (NASDAQ:KHC) to enhance its gross profit margin by 190 basis points during the first six months of 2024 compared to the same period last year. While the quarterly outcomes were varied, the company’s leadership focused on critical areas, resulting in a surge in the stock price following the release of the second-quarter earnings.
Consequently, it expects its adjusted gross margin to expand 75 to 125 basis points and for its adjusted operating margin to rise by one to three percentage points. It also predicts its adjusted EPS to grow 1% to 3% to $3.01 to $3.07 per share.
The expected growth should allow the company to generate more shareholder value, therefore cementing its position as one of the best long-term stocks to buy, according to Warren Buffett. At $35 a share, The Kraft Heinz Company (NASDAQ:KHC) Stock trades at just 11 times its forward earnings, the midpoint of this year’s earnings estimate. The low valuation is further complimented by a high forward dividend yield of 4.55%.
As of June 2024 end, 43 out of the 912 hedge funds covered by Insider Monkey’s research had invested in The Kraft Heinz Company (NASDAQ:KHC). Warren Buffett’s Berkshire Hathaway owned the most significant stake, which was worth $10.49 billion.
4. The Coca-Cola Company (NYSE:KO)
Warren Buffett’s First Major Purchase: 2010
Berkshire Hathaway’s Latest Investment Stake: $25.46 Billion
Number of Hedge Funds Holding Stakes as of Q2: 68
The Coca-Cola Company (NYSE:KO) is one of Buffett’s most extended holdings, and Buffet has always diversified his portfolio into the beverage sector as a consumer defensive investment play. The company is best known for the manufacturing, marketing, and selling of various nonalcoholic beverages worldwide.
The Coca-Cola Company (NYSE:KO) is one of the best long-term stocks to buy, according to Warren Buffett, owing to its powerful brands that allow it to navigate any economic cycle while generating significant returns. While it is best known for Coke, it also owns brands like Powerade, sports drinks, Minute Maid juices, Costa coffee, Gold Peak tea, Dasani water, and Bar’s root beer.
The company does not bottle or distribute all its beverages. Instead, it outsourced to third-party bottlers. The model leads to much less revenue for Coca-Cola but translates into more reliable profits and wider profit margins.
In the second quarter, the beverage juggernaut recorded $12.3 billion in revenues, marking a 3% increase compared to the previous year. The firm is recognized for its steady growth, expanding its net sales from $33 billion in 2020 to $46 billion by 2023. The Coca-Cola Company (NYSE:KO) has experienced a compound annual growth rate (CAGR) of 6% in revenue and 7% in free cash flow in the last five years.
The Coca-Cola Company (NYSE:KO) has been increasing its dividends for over 60 years, making it a prestigious Dividend Kings group member. Companies must have a strong track record of managing their finances to maintain membership in this group. They need to continuously increase their earnings per share (EPS) and free cash flow (FCF) even during economic downturns to be able to afford their growing dividend payments.
The beverage giant meets this threshold, therefore underlining why it is one of the best long-term stocks to buy, according to Warren Buffett. Currently, it pays a decent forward dividend yield of 2.72%
Along with Buffett, 68 hedge funds out of the 912 that were part of Insider Monkey’s database had bought the firm’s shares in Q2 2024. Berkshire Hathaway remained the biggest investor, holding $25.46 billion worth of shares.
3. American Express Company (NYSE:AXP)
Warren Buffett’s First Major Purchase: 2010
Berkshire Hathaway’s Latest Investment Stake: $35.11 Billion
Number of Hedge Funds Holding Stakes as of Q2: 68
American Express Company (NYSE:AXP) is one of Buffett’s top stock picks in the financial services sector, operating as an integrated payments company. Its products and services include credit cards, charge cards, banking, and other payment and financing products.
The company is increasingly outperforming other credit card companies, offering significant upside potential for long-term investors. The company’s strong financial performance, robust sales expansion, and youthful clientele are key factors that affirm its long-term prospects.
The youthful clientele base positions American Express Company (NYSE:AXP) as a top choice for credit card investments. The financial technology company reported gaining an additional 3.4 million credit card accounts in the first three months of 2024. Furthermore, American Express noted that millennial and Gen Z individuals “were responsible for over 60% of new credit card account openings worldwide.
Revenue in the second quarter increased by 8% compared to the previous year, and when adjusted for changes in currency values, it jumped to 9%. What’s even more remarkable is the substantial increase in earnings per share (EPS). The payments company’s EPS jumped by 44% year over year. The company’s distinctive business approach is remarkably effective at generating profits in various markets.
American Express Company (NYSE:AXP) meets the standards as one of the best long-term stocks to buy, according to Warren Buffett, owing to its consistent earnings power and fundamental strength through both a growing bottom line and dividend.
While trading at a price-to-earnings multiple of 17, the stock offers a 1.10% dividend yield for generating some passive income. Its dividend per share payout is up by 165% over the past ten years, affirming American Express’s ability to generate free cash flow for distribution regardless of the prevailing business environment.
As of June 2024 end, 68 out of the 912 hedge funds covered by Insider Monkey’s research had invested in American Express Company (NYSE:AXP). Warren Buffett’s Berkshire Hathaway was the biggest shareholder through its $35.11 billion stake.
In its Q1 2024 investor letter, Artisan Select Equity Fund commented on American Express Company (NYSE:AXP) as follows:
“American Express Company (NYSE:AXP) shares rose 22% this quarter. This is an interesting case study given our earlier discussion about inflation. American Express operates one of the largest credit card networks in the world. Its revenue is largely a function of a fee rate applied to the dollar value of goods and services that are transacted through its network. That dollar value is, of course, nominal. As inflation pushes up the value of those goods and services as it has for the past few years, American Express will capture that value through its fee structure. The past few years inflation has clearly been a benefit. Aside from its inherent inflation protection, the business is a very strong one. Payments continue to shift toward electronic forms, benefiting American Express. It also has a strong brand that attracts loyal and highly profitable customers that are the envy of the industry. Recent results have been strong with revenues moving nicely ahead of GDP.”
2. Bank of America Corporation (NYSE:BAC)
Warren Buffett’s First Major Purchase: 2017
Berkshire Hathaway’s Latest Investment Stake: $41.08 Billion
Number of Hedge Funds Holding Stakes as of Q2: 92
Bank of America Corporation (NYSE:BAC) is one of Warren Buffet’s longest holdings in the financial services sector. The company offers banking and financial products to individuals, businesses, institutional investors, and large corporations through its subsidiaries.
Bank of America Corporation (NYSE:BAC) is one of the oldest banks in the US, with a history dating back to 1904. Its track record in standing the test of time has always made it a firm favorite for the billionaire investor. Additionally, it is a leader in the US retail deposits, a clear indication of trust among consumers in the US and 35 countries.
Additionally, the financial conglomerate has consistently generated profits. Over the last ten years, its net profit margin has typically been around 25%. This financial success enables the company to keep distributing dividends. For investors who prefer stocks that offer a steady passive income, Bank of America Corporation (NYSE:BAC) could be attractive due to its 2.46% dividend yield, which affirms why it is one of the best long-term stocks to buy, according to Warren Buffett.
It boasts a total asset value exceeding $3.3 trillion, establishing itself as a significant player in the financial sector and underscoring its solid foundation. Additionally, it holds a substantial deposit portfolio valued at nearly $2 trillion. Although it is gradually growing, these expansions are not significant enough to alter its position. Over the decade from 2013 to 2023, Bank of America Corporation (NYSE:BAC) experienced a modest increase in revenue of 11%.
Buffett’s investment firm Berkshire has sold about 5.8 million shares of the financial services company for about $228.7 million. The transaction is believed to have occurred between September 6 and September 10 2024. Buffett still remains the biggest shareholder in the bank.
The stock trades at a price-to-earnings (P/E) ratio of 13.6. While nearly double what it sold for late last year, it is expected of a financial institution that has benefited from higher interest rates.
During June 2024, 92 out of the 912 hedge funds part of Insider Monkey’s research were the firm’s investors. Bank of America Corporation (NYSE:BAC)’s largest shareholder is Warren Buffett’s firm, courtesy of its $41.08 billion investment.
Here is what ClearBridge Value Equity Strategy said about Bank of America Corporation (NYSE:BAC) in its first quarter 2024 investor letter:
“We added several new positions during the quarter. Our largest new addition was Bank of America Corporation (NYSE:BAC), one of the world’s leading financial institutions, serving some 66 million consumer and small business clients across the U.S. as well as large corporations, financial institutions and governments globally. We believe that the interest rate pressure that Bank of America faced in early 2023 has subsided, and risks surrounding deposit outflows have abated, which should allow the company to improve its book value and capital growth as well as benefit from a rebound of capital markets activity.”
1. Apple Inc. (NASDAQ:AAPL)
Warren Buffett’s First Major Purchase: 2016
Berkshire Hathaway’s Latest Investment Stake: $84.25 Billion
Number of Hedge Funds Holding Stakes as of Q2: 184
Apple Inc. (NASDAQ:AAPL) is one of the best long-term stocks to buy, according to Warren Buffett, a consumer tech giant. The company is engaged in developing and selling an array of devices, including iPhones, iPads, and Mac’s wearables, among others.
The company’s competitive edge stems from its game-changing devices and solutions that have propelled it to a three trillion dollar empire. Recently, the company unveiled the iPhone 16, a new device expected to reinvigorate growth in its slowing iPhone business. The company is also betting on artificial intelligence as it aims to strengthen its product pipeline to attract more sales.
Analysts have touted the new iPhone as a product that could be the most successful iPhone yet, likely to generate more value. Apple Inc. (NASDAQ:AAPL)’s revenue growth in the past year, up to the third quarter of 2024, has been relatively slow, increasing by just 0.43%. However, there was a significant jump in earnings during the third quarter of 2024, with a notable quarterly increase of 4.87%. This suggests a consistent financial path, though, with a moderate pace of growth.
After rallying for the better part of the year, Apple Inc. (NASDAQ:AAPL) is not necessarily cheap, as it trades at a price-to-earnings multiple of 29. Nevertheless, the premium valuation is expected of a three trillion dollar company that is poised to generate significant value.
Apple remains Buffett’s biggest holdings despite downsizing his stakes by up to 56% in the first two quarters of the year. The oracle of Omaha sold roughly 510 million shares in the tech giant. Nevertheless the company still accounts for about 40% of the portfolio.
It remains one of Buffett’s longest investments owing to the fact that it pays a dividend with a yield of 0.45%. Additionally, the company returns value through stock buybacks. By June 2024 end, 184 out of the 912 hedge funds profiled by Insider Monkey were the firm’s investors. Apple Inc. (NASDAQ:AAPL)’s largest shareholder is Warren Buffett’s Berkshire Hathaway, whose $84.25 billion stake also makes the stock the biggest in Berkshire’s portfolio.
Here is what Mar Vista Focus strategy said about Apple Inc. (NASDAQ:AAPL) in its Q2 2024 investor letter:
“Investors were reminded of the strength of the Apple Inc. (NASDAQ:AAPL) ecosystem as management demonstrated how generative AI solutions would be integrated into Apple’s 1.2 billion iPhone installed base. Apple plans to integrate generative AI features into its iOS 18, which will be broadly released in the fall with the iPhone 16. We believe Apple should benefit from generative AI as it will spur a meaningful iPhone upgrade cycle and create new avenues of monetization through its app store and advertising offerings. We believe this will support intrinsic value growth that will range between high-single-digits and low-double-digits over our investment horizon.”
The best long-term stocks to buy, according to Warren Buffett, are high-quality companies poised to generate long-term value. However, given that the artificial intelligence arms race is just but starting, there are under-the-radar AI stocks trading at highly discounted valuations that hold greater promise for anyone looking to diversify their portfolio. If you are looking for an AI stock that is more promising than the top activist investment plays, check out our report about the cheapest AI stock.
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