These powerful brands will help grow your savings for a happy retirement.
Warren Buffett’s investing career has inspired countless investors to follow his strategy. There’s no better way to start imitating the Oracle of Omaha than to follow his stock selections at Berkshire Hathaway.
Berkshire owns dozens of privately owned businesses, but Buffett looks at buying stocks the same way as buying the whole business. Here are two stocks from Berkshire’s portfolio to hold for a lifetime.
1. Coca-Cola
Coca-Cola (KO 0.17%) has been a constant in Berkshire’s stock portfolio for 35 years. The stock continues to be a strong performer, up 22% so far in 2024.
Despite weak consumer spending trends this year, the beverage industry has remained resilient. Coca-Cola posted a 15% year-over-year increase in adjusted revenue in Q2, driven by balanced increases in pricing and concentrate sales.
The company has a powerful brand that gives the business a durable competitive advantage. Coca-Cola has valuable relationships with retail partners due to the brand’s ability to drive sales. For example, the company recently launched a lighter and more affordable bottle in India that has extended shelf life, which is helping reach more customers and reduce costs.
Coke is also leveraging the power of artificial intelligence (AI) to adjust pricing, which is driving revenue growth but also will lead to more efficient operations over time. The company’s margins were up last quarter and that’s a good sign of what’s to come in a stronger demand environment.
The carbonated soft drink industry continues to show long-term growth potential. Statista estimates the revenue in the at-home market will grow 5% annually through 2028. Coca-Cola stock should grow in value over the long term, and investors also get the benefit of a forward dividend yield of 2.70% to pad returns.
2. Apple
Apple (AAPL -0.44%) stock has soared to new highs following the announcement of Apple Intelligence in June. Investors see a strong upgrade cycle coming for the iPhone, which generates most of Apple’s $385 billion in annual sales.
While Berkshire reduced its massive stake in Q2, Buffett isn’t selling out of Apple. He previously called Apple a superior business to any Berkshire owns, and he mentioned at this year’s shareholders’ meeting that the stock will likely remain Berkshire’s largest investment by the end of the year.
With an installed base of more than 2.2 billion active devices, Apple Intelligence is a free update coming to Apple’s software but is expected to drive a major upgrade cycle for Apple over the next few years, since it will require devices with more recent processors. The AI features will undoubtedly reshape how millions of customers interact with their devices, and that could lead to another stretch of strong growth.
Ultimately, the most attractive opportunity for Apple is the impact a growing installed base of devices will do for its lucrative services business. Revenue from services is already hitting new records heading into the launch of Apple Intelligence next month, up 14% year-over-year last quarter. Apple has made investments to expand the content offering across Apple TV+ and other services, which has driven paid subscriptions to surpass 1 billion.
Apple stock is trading at a higher price-to-earnings ratio than when Buffett first bought shares in 2016, but investors should expect the stock to follow the growth in Apple’s earnings. It’s one of the most valuable brands in the world that should grow more valuable in the AI era.
John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple and Berkshire Hathaway. The Motley Fool has a disclosure policy.
