5 Best Warren Buffett Stock Picks for Beginners

In this article, we discuss the 5 best Warren Buffett stock picks for beginners. To read Warren Buffett’s investment strategy and Q2 bets of Berkshire Hathaway, go directly to the 13 Best Warren Buffett Stock Picks for Beginners.

5. Bank of America Corporation (NYSE:BAC)

Percentage of Warren Buffett’s Stock Portfolio: 8.51%

Number of Hedge Fund Holders: 90

Bank of America Corporation (NYSE:BAC) is one of the largest banking institutions in the United States. Even though it ranks at 5th on our list of Warren Buffett’s stock picks for beginners, it is Berkshire Hathaway’s second-largest holding and covers 8.51% of its portfolio with over 1 billion shares worth $29.63 billion.

On October 17, Bank of America Corporation (NYSE:BAC) reported a GAAP EPS of $0.90 for its third quarter. The company’s net interest income benefited from higher interest rates and loan growth. It showed an increase of 4%. Bank of America Corporation (NYSE:BAC) also exceeded the revenue estimates by $130 million and generated revenues of $25.2 billion, up 2.9% YoY.

On October 18, Bank of America Corporation (NYSE:BAC) declared a $0.24 per share quarterly dividend, payable by December 29 to the shareholders of record on November 30. As of October 25, the company’s dividend yield stands at 3.76%.

Here’s what Diamond Hill Capital said about Bank of America Corporation (NYSE:BAC) in its second-quarter 2023 investor letter:

“Other bottom contributors included SunOpta, Bank of America Corporation (NYSE:BAC) and Texas Instruments. Bank of America (which we added to the portfolio in Q2) is among the US’s largest banks. Shares were pressured during the quarter against a still-challenging backdrop for banks, particularly as investors fret about rising deposit costs and the values of some longer-duration assets in a rising-rates environment.”

4. Apple Inc. (NASDAQ:AAPL)

Percentage of Warren Buffett’s Stock Portfolio: 51%

Number of Hedge Fund Holders: 135

Apple Inc. (NASDAQ:AAPL) is one of the most successful and biggest tech companies in the world that manufactures and sells phones, tablets, computers, and related accessories and services.

While Apple Inc. (NASDAQ:AAPL) did not roll out any AI products like its competitors did earlier, it has recently been revealed that it is rushing to jump into the AI-driven market. According to Bloomberg, the company will be investing $1 billion every year to revolutionize its products with AI integration. Moreover, it was reported in July that the company was internally working on bringing out software to rival ChatGPT and it is called Ajax.

In Q2, hedge fund sentiment was positive toward Apple Inc. (NASDAQ:AAPL) as 135 hedge funds owned a stake in the company compared to 131 in the prior quarter. Apple Inc. (NASDAQ:AAPL) is one of the best Warren Buffett stock picks for beginners.

Apple Inc. (NASDAQ:AAPL) released the iPhone 15 series in September 2023. While the phone has not caught popularity in China yet, it is being well received in the U.S. According to initial sales figures reported by Counterpoint Research, the total sales units witnessed double-digit growth in the first 9 days of the release of the series. The report mentioned that there has been robust demand for Base, Pro, and especially Pro Max models. Lastly, iPhone 11 and iPhone 12 users are expected to upgrade to the new series.

Apple Inc. (NASDAQ:AAPL) was mentioned in Aristotle Atlantic Partners, LLC’s third quarter 2023 investor letter. Here is what it said:

“Apple Inc. (NASDAQ:AAPL) contributed to outperformance in the third quarter, as a result of the underweight position relative to the benchmark. Following a very strong first-half performance, the stock saw a pullback ahead of the iPhone 15 launch, as investors weigh the potential growth from the new phone in the face of macroeconomic headwinds and slowing consumer spend.”

3. Mastercard Incorporated (NYSE:MA)

Percentage of Warren Buffett’s Stock Portfolio: 139

Number of Hedge Fund Holders: 0.45%

Mastercard Incorporated (NYSE:MA) is a multinational payment processing company that serves the public, governments, merchants, businesses, and financial institutions. The corporation provides its services in over 210 countries and territories.

Mastercard Incorporated (NYSE:MA) is one of the best Warren Buffett stock picks for beginners as 19 out of 21 Wall Street analysts keep a Buy rating on it with an average price target of $458.35.

On October 26, Mastercard Incorporated (NYSE:MA) reported a non-GAAP EPS of $3.39, surpassing the estimation by $0.18 and the revenue grew 14% YoY at $6.5 billion. According to the company, its expanding payment network, payment and security solutions, and value-added services were responsible for the net revenue seeing an increase of 14%.

Mastercard Incorporated (NYSE:MA) was mentioned in Baron Funds’ second quarter 2023 investor letter. Here is what it said:

“We modestly trimmed Visa Inc., Mastercard Incorporated (NYSE:MA), and Accenture plc to manage the position sizes and raise capital to fund purchases elsewhere. These stocks remain full-sized positions and high-conviction ideas in the Fund.

Another fintech industry trend we’re seeing is a pickup in M&A activity, most notably in the payments sector. The year started with Nuvei’s $1.3 billion acquisition of Paya announced in January. In April, Network International received an initial takeover offer from a group of private equity firms, which was then topped by Brookfield Asset Management whose $2.8 billion offer was accepted by the Board in June. Following reports earlier this year of a bidding war between Visa Inc. and Mastercard Incorporated to acquire cloud-based issuer processor and core banking software provider Pismo.”

2. Visa Inc. (NYSE:V)

Percentage of Warren Buffett’s Stock Portfolio: 0.56%

Number of Hedge Fund Holders: 171

Visa Inc. (NYSE:V) is a California-based payment card services company that enables electronic funds transfers through its branded credit, debit, and prepaid cards.

Visa Inc. (NYSE:V) released its Q4 and FY 2023 earnings report on October 24. In Q4, the company’s revenue was up 10.3% YoY at $8.6 billion and posted a non-GAAP EPS of $2.33, outperforming the estimates by $50 million and $0.09, respectively. Due to the YoY growth in payments volume, Visa Inc. (NYSE:V) generated net revenues of $32.7 billion for FY 23, up 11% from the previous year. The company’s profits also increased in 2023 and it was able to report a non-GAAP net income of $8.77 per share, showing an increase of 17% from the prior year.

Visa Inc. (NYSE:V) has increased its dividend for the past 15 years, including its latest increase on October 24. The company raised its quarterly dividend by 15.6% to $0.52 per share, payable by December 1 to the shareholders of record on November 9. In addition to an increase in its quarterly dividend, Visa Inc. (NYSE:V) authorized a $25 billion multi-year class A common stock share repurchase program.

Visa Inc. (NYSE:V) is one of the best Warren Buffett stock picks for beginners as it is a blue chip stock that Warren Buffett has held since the third quarter of 2011. Chris Hohn’s value-based hedge fund TCI Fund Management has also kept the stock in its portfolio since 2019 and was the most prominent hedge fund holder of the company in Q2 with 17.786 million shares worth over $4.22 billion.

Baron FinTech Fund made the following comment about Visa Inc. (NYSE:V) in its second quarter 2023 investor letter:

“We modestly trimmed Visa Inc. (NYSE:V), Mastercard Incorporated, and Accenture plc to manage the position sizes and raise capital to fund purchases elsewhere. These stocks remain full-sized positions and high-conviction ideas in the Fund.

Another fintech industry trend we’re seeing is a pickup in M&A activity, most notably in the payments sector. The year started with Nuvei’s $1.3 billion acquisition of Paya announced in January. In April, Network International received an initial takeover offer from a group of private equity firms, which was then topped by Brookfield Asset Management whose $2.8 billion offer was accepted by the Board in June. Following reports earlier this year of a bidding war between Visa Inc. and Mastercard Incorporated to acquire cloud-based issuer processor and core banking software provider Pismo, Visa announced its intention to acquire the Brazilian company for $1 billion in late June.”

1. Amazon.com, Inc. (NASDAQ:AMZN)

Percentage of Warren Buffett’s Stock Portfolio: 0.39%

Number of Hedge Fund Holders: 278

Amazon.com, Inc. (NASDAQ:AMZN) is an American conglomerate that essentially provides cloud services and online retailing. The company offers its services across Africa and the Middle East, the Americas, Australia, Asia, and Pacific, and Europe. 

On October 24, Seaport Research Partners analyst Aaron Kessler initiated coverage of Amazon.com, Inc. (NASDAQ:AMZN) stock with a Buy rating and a $145 price target. The analyst mentioned that the company has a robust retail margin because of “ad momentum and fulfillment and shipment optimization”. For Q4, the analyst expects the retail margin improvement to continue, Amazon Web Services (AWS) to expand, and e-commerce to grow at a stable pace.

According to Insider Monkey’s database, 278 elite hedge funds owned a stake in Amazon.com, Inc. (NASDAQ:AMZN) stock with a combined stake value of $34.9 billion, compared to 243 hedge funds with a combined stake value of $25.7 billion. Chicago-based Harris Associates was the most significant stakeholder in the company with 15.6 million shares worth $2.036 billion.

White Falcon Capital Management mentioned Amazon.com, Inc. (NASDAQ:AMZN) in its third quarter 2023 investor letter. Here is what it said:

“There are comparable narratives involving NU Holdings, Amazon.com, Inc. (NASDAQ:AMZN), and Teck Resources, to name a few holdings from the White Falcon portfolio. Amazon constructed its logistics network and cloud computing infrastructure using yesterday’s currency, but it is poised to capitalize on this network with the inflated dollars of tomorrow. In essence, we believe we hold wonderful businesses with growing revenue streams and potential for operating leverage – all at reasonable valuations.”

You can also look at the Duquesne Family Office’s 15 New Stock Picks and Billionaire David Tepper Doesn’t Like Most Stocks But He Likes These 12.

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