5 Best Long-Term Stocks To Buy According To Warren Buffett

3. The Coca-Cola Company (NYSE:KO)

Number of Hedge Fund Holders: 59

Berkshire’s Holding Period: 12 Years

Berkshire’s Stake Value: $25,444,000,000

Warren Buffett has been a long-term position holder in The Coca-Cola Company (NYSE:KO). In the fourth quarter of 2022, Buffett owned 400 million shares of The Coca-Cola Company (NYSE:KO) worth $25.4 billion, representing 8.5% of the total 13F holdings. Berkshire has had a stake in The Coca-Cola Company (NYSE:KO) for 12 years. 

On February 14, The Coca-Cola Company (NYSE:KO) reported a Q4 non-GAAP EPS of $0.45, in-line with estimates. Revenue for the quarter climbed 6.3% year-over-year to $10.1 billion, beating market consensus by $180 million. For FY 2023, the company expects to deliver organic revenue growth of 7% to 8%, versus an estimated growth of 3.59% year-over-year.

Morgan Stanley analyst Dara Mohsenian raised the price target on The Coca-Cola Company (NYSE:KO) to $70 from $68 and kept an Overweight rating on the shares on February 15. The analyst believes that Coke’s impressive 11% organic sales growth in Q4, measured in unit cases, demonstrates the company’s strong ability to set prices, limited demand sensitivity, and strong execution. Morgan Stanley still favors Coca-Cola, pointing to the company’s estimated 7%-8% organic sales growth in FY23 as evidence of a robust top-line expansion. Additionally, the stock is now priced similarly or at a lower level than other large-cap peers, the analyst told investors. 

According to Insider Monkey’s third quarter database, 59 hedge funds were bullish on The Coca-Cola Company (NYSE:KO), compared to 60 funds in the prior quarter. Ray Dalio’s Bridgewater Associates is a prominent stakeholder of the company, with 11.4 million shares worth $642.3 million. 

Rowan Street Capital made the following comment about The Coca-Cola Company (NYSE:KO) in its Q4 2022 investor letter:

“Let’s take The Coca-Cola Company (NYSE:KO) for example. Its dividend yield is 2.8%, earnings are estimated to grow at only 3.6% rate per year over next 4 years, and its earnings multiple is currently at 24x (based on next year’s forecasted earnings). KO has an anemic growth, so we can argue that paying 24x earnings is not very attractive. Let’s assume that the multiple will stay constant over the next 3-5 years, thus our expected annual returns will be 2.8%+3.6% = 6.4% (that is below the current reported inflation rate and only slightly above the risk-free rate of 4%).”