In this article, we discuss the 5 best stocks to buy according to Warren Buffett. If you want to read our detailed analysis of these stocks, go directly to the 10 Best Stocks to Buy According to Warren Buffett.
5. The Kraft Heinz Company (NASDAQ: KHC)
Number of Hedge Fund Holders: 33
The Kraft Heinz Company (NASDAQ: KHC) is ranked fifth on our list of 10 best stocks to buy according to Warren Buffett. The firm makes and sells food products and beverages. It is run from Pennsylvania. According to the latest data, Berkshire Hathaway owns 325 million shares in the company that are worth $13.2 billion, representing 4.53% of the entire portfolio of the Nebraska-based firm.
In earnings results for the second quarter, posted on August 4, The Kraft Heinz Company (NASDAQ: KHC) reported earnings per share of $0.78, beating market predictions by $0.06. The revenue over the period was $6.6 billion, beating estimates by $70 million.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm First Eagle Investment Management is a leading shareholder in The Kraft Heinz Company (NASDAQ: KHC) with 6.7 million shares worth more than $275 million.
In its Q4 2020 investor letter, Berkshire Hathaway highlighted a few stocks and The Kraft Heinz Company (NASDAQ: KHC) was one of them. Here is what the firm said:
“We exclude our Kraft Heinz holding — 325,442,152 shares — (In the list of 15 common stock investments that at yearend were our largest in market value) because Berkshire is part of a control group and therefore must account for that investment using the “equity” method. On its balance sheet, Berkshire carries the Kraft Heinz holding at a GAAP figure of $13.3 billion, an amount that represents Berkshire’s share of the audited net worth of Kraft Heinz on December 31, 2020.
Berkshire and its subsidiaries hold investments in certain businesses that are accounted for pursuant to the equity method. Currently, the most significant of these is our investment in the common stock of The Kraft Heinz Company (“Kraft Heinz”). Kraft Heinz is one of the world’s largest manufacturers and marketers of food and beverage products, including condiments and sauces, cheese and dairy, meals, meats, refreshment beverages, coffee and other grocery products. Berkshire currently owns 325,442,152 shares of Kraft Heinz common stock representing 26.6% of the outstanding shares.
We recorded equity method earnings from our investment in Kraft Heinz of $95 million in 2020, $493 million in 2019 and losses of approximately $2.7 billion in 2018. Equity method earnings (losses) included the effects of goodwill and identifiable intangible asset impairment charges recorded by Kraft Heinz. Our share of such charges was approximately $850 million in 2020, $450 million in 2019 and $3.7 billion in 2018. We received dividends from Kraft Heinz of $521 million in each of 2020 and 2019 and $814 million in 2018, which we recorded as reductions in our carrying value.
Shares of Kraft Heinz common stock are publicly-traded and the fair value of our investment was approximately $11.3 billion at December 31, 2020 and $10.5 billion at December 31, 2019. The carrying value of our investment was approximately $13.3 billion at December 31, 2020 and $13.8 billion at December 31, 2019. As of December 31, 2020, the carrying value of our investment exceeded the fair value based on the quoted market price by $2.0 billion (15% of carrying value). In light of this fact, we evaluated our investment in Kraft Heinz for impairment. We utilize no bright-line tests in such evaluations. Based on the available facts and information regarding the operating results of Kraft Heinz, our ability and intent to hold the investment until recovery, the relative amount of the decline and the length of time that fair value was less than carrying value, we concluded that recognition of an impairment loss in earnings was not required. However, we will continue to monitor this investment and it is possible that an impairment loss will be recorded in earnings in a future period based on changes in facts and circumstances or intentions.”
4. The Coca-Cola Company (NYSE: KO)
Number of hedge fund holders: 62
The Coca-Cola Company (NYSE: KO) is a Georgia-based beverage company. It is placed fourth on our list of 10 best stocks to buy according to Warren Buffett. Latest data shows that Berkshire Hathaway owned 400 million shares in the beverage maker at the end of June 2021. These are worth $21.6 billion and represent 7.38% of the investment portfolio of the Buffett-led company.
On July 22, investment advisory Citi kept a Neutral rating on The Coca-Cola Company (NYSE: KO) stock but raised the price target to $60 from $57, noting that the earnings beat of the firm in the second quarter was driven by stronger net sales growth.
Out of the hedge funds being tracked by Insider Monkey, New York-based firm DE Shaw is a leading shareholder in The Coca-Cola Company (NYSE: KO) with 8.8 million shares worth more than $481 million.
3. American Express Company (NYSE: AXP)
Number of Hedge Fund Holders: 52
American Express Company (NYSE: AXP) is a New York-based firm that provides financial and travel-related services. It is ranked third on our list of 10 best stocks to buy according to Warren Buffett. Regulatory filings show that at the end of June 2021, Berkshire Hathaway owned more than 151 million shares in the finance firm that were worth over $25 billion, representing 8.5% of the investment portfolio.
On July 26, investment advisory RBC Capital maintained a Sector Perform rating on American Express Company (NYSE: AXP) stock and raised the price target to $185 from $174, noting that the revenue trends at the firm were improving.
Out of the hedge funds being tracked by Insider Monkey, Washington-based firm Fisher Asset Management is a leading shareholder in American Express Company (NYSE: AXP) with 15.3 million shares worth more than $2.5 billion.
In its Q2 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and American Express Company (NYSE: AXP) was one of them. Here is what the fund said:
“In financials, American Express has done an excellent job demonstrating the resiliency of its franchise in the midst of a global pandemic that drove a 60% decline in its core travel and entertainment business. The company’s spend-centric model has been helped by fiscal stimulus ensuring a flush consumer, while management continues to execute well by adding millions of new consumer and small and medium business accounts, which should benefit the franchise over the medium to long term. We remain optimistic regarding the company’s prospects as travel and entertainment activity rebounds, adding to our position in the quarter.”
2. Bank of America Corporation (NYSE: BAC)
Number of Hedge Fund Holders: 87
Bank of America Corporation (NYSE: BAC) is placed second on our list of 10 best stocks to buy according to Warren Buffett. The company markets banking and other financial services and is headquartered in North Carolina. SEC filings reveal that Berkshire Hathaway owned more than 1 billion shares in the bank at the end of the second quarter of 2021 that were worth more than $41 billion, representing 14.2% of the investment portfolio.
On June 2, investment advisory Truist initiated coverage of Bank of America Corporation (NYSE: BAC) stock with a Buy rating and a price target of $48. Gregg Gilbert, an analyst at the firm, issued the ratings update.
At the end of the second quarter of 2021, 87 hedge funds in the database of Insider Monkey held stakes worth $46 billion in Bank of America Corporation (NYSE: BAC), down from 97 in the previous quarter worth $45 billion.
1. Apple Inc. (NASDAQ: AAPL)
Number of Hedge Fund Holders: 138
Apple Inc. (NASDAQ: AAPL) is ranked first on our list of 10 best stocks to buy according to Warren Buffett. The firm operates as a technology company and is based in California. Buffett owns more than 887 million shares in the technology company through Berkshire Hathaway that are worth more than $121 billion, representing 41.46% of the investment portfolio.
On July 28, investment advisory Loop Capital reiterated a Buy rating on Apple Inc. (NASDAQ: AAPL) stock and raised the price target to $165 from $150, noting that the firm was positioned for a stronger than expected second half of the year.
At the end of the second quarter of 2021, 138 hedge funds in the database of Insider Monkey held stakes worth $145 billion in Apple Inc. (NASDAQ: AAPL), up from 127 in the preceding quarter worth $130 billion.
In its Q1 2021 investor letter, Distillate Capital, an asset management firm, highlighted a few stocks and Apple Inc. (NASDAQ: AAPL) was one of them. Here is what the fund said:
“Apple is an even more notable situation and one that highlights our free cash valuation methodology and bears further discussion given its Q3 ‘20 sale from our strategy. For an extended period, Apple was extraordinarily inexpensive on a free cash flow basis and was the largest position in our strategy, exceeding 5% of the portfolio.”
You can also take a peek at 10 Penny Stocks Redditors are Buying in August and 10 Best Nickel Stocks to Buy Now.
