Warren Buffett, the Chairman and CEO of Berkshire Hathaway should need no introduction. He is widely considered as one of the world’s most successful investors, with a total net worth of more than $110 billion. Amassing this kind of wealth was not easy, and Buffett came from very humble beginnings.
He is well known for his value investing principles, buying into companies with strong business fundamentals below their intrinsic value. His investing strategy was inspired by his late mentor, Benjamin Graham. Some of Buffett’s main considerations when investing into a company are its debt, profit margin, P/E ratio, P/B ratio, and free cash flow.
While value investing may have its flaws, its strategies have worked very well for Buffett’s Berkshire Hathaway. As a result multinational conglomerate has averaged a 20% annual return for its shareholders since inception. Below we will discuss our top 5 Warren Buffett stocks to buy and hold for the long term!
Apple Inc. (NASDAQ: APPL)
Percentage of Portfolio: 42.78%
Number of Shares Held: 887,135,554
Berkshire Hathaway’s Total Value: $125,529,681,000
Apple is one of the world’s largest companies that specializes in consumer electronics and software. Founded in 1976, by Steve Jobs and Steve Wozniak, the company is known for its line of consumer electronic products.
Fourth Quarter 2021 Earnings Highlights:
During Apple’s fourth quarter fiscal 2021 earnings results the company beat analyst estimates on every sales category except iPads. Total revenue was up 11% annually to $123.9 billion, vs. $118.66 billion estimated. Gross margin was 43.8% vs. 41.7% estimated.
EPS (Earnings Per Share) came in at $2.10, up 25% year-over-year. Despite supply chain bottlenecks and the ongoing chip shortage, Apple was able to navigate the storm. Apple’s CEO Tim Cook, provided no guidance for the first quarter fiscal 2022 earnings. However, he expects supply chain constraints in the March quarter to be ‘’less than they were in the December quarter.’’
Conclusion:
With Apple being one of the world’s largest companies, investors are often wary of the growth the company has in the years ahead. However, the company continues to execute on their long term plans with consistent year-over-year growth. As supply chain bottlenecks ease over the next 12-18 months, Apple could be a great core position in one’s portfolio.
American Express Company (NYSE: AXP)
Percentage of Portfolio: 8.66%
Number of Shares Held: 151,610,700
Berkshire Hathaway’s Total Value: $25,399,340,000
American Express is a multinational corporation that specializes in payment card services. The company was founded in the 1850’s when the companies founded by Henry Wells, Willam Fargo, and John Warren Butterfield merged as a joint-stock corporation.
Fourth Quarter 2021 Earnings Highlights:
On January 25, 2022, American Express reported its fourth quarter fiscal 2021 earnings results. Total revenue came in at $12,145 billion, up 30% year-over-year. EPS (Earnings Per Share) came in at $2.18, vs. $1.78 estimated. Therefore the quarter’s strong performance was largely due to higher card member spending and network volumes, which reached record highs.
Network volumes for the quarter reached $368.1 billion, up 29% year-over-year. With an improving macro environment, American Express expects rising credit card spending to improve the company’s performance.
Conclusion:
The company project’s 2022 revenues to rise between 18-20% year-over-year. They expect full-year EPS (Earnings Per Share) to be between $9.25-$9.65. American Express plans to hike their dividend by 20% to 52 cents per share. With an improving macro environment and strong fourth quarter earnings results, American Express should be a top Warren Buffett stock for 2022 and beyond.
Bank of America (NYSE: BAC)
Percentage of Portfolio: 14.61%
Number of Shares Held: 1,010,100,606
Berkshire Hathaway’s Total Value: $42,878,771,000
Bank of America (BofA or BAO), is an American multinational investment bank and financial services company. It is the second largest bank in the United States, behind JP Morgan Chase. It is a part of the big four banks in the United States, and serves roughly 10.73% of all bank deposits.
Fourth Quarter 2021 Earnings Highlights:
On January, 19th, 2022, BofA reported its fourth quarter fiscal 2021 earning results. Total revenue came in at $22.1 billion, in line with analyst estimates. Net interest margin was 1.67%, below analyst consensus of 1.68%.
Net income rose to $7 billion, up 28% year-over-year. EPS (Earnings Per Share) came in at $0.82, vs. $0.76 estimated. BofA’s strong quarterly performance was largely due to strong operating leverage, as revenues grew faster than expenses.
BofA CFO Alastair Borthwick Statement:
‘’We ended the year on a strong note, producing our second straight quarter of year-over-year positive operating leverage. Asset quality remained strong with loss rates at historically low levels as the global economy continued to improve.’’
Conclusion:
After a strong end to 2021, BofA remains focused on increasing its book value per share, while strengthening its leadership in retail deposits. With the U.S. economy continuing to recover from the Covid pandemic, BofA is a top financial services company to keep on your radar in 2022.
Coca Cola Co (NYSE: KO)
Percentage of Portfolio: 7.15%
Number of Shares Held: 400,000,000
Berkshire Hathaway’s Total Value: $20,988,000,000
Coca Cola Co should need no introduction. It is widely considered as one of the most iconic and universal brands in the world. Founded in 1892, the company produces carbonated soft drinks and other related products.
Some of the company’s most notable brands include Coke, Dasani, Fresca, Fanta, Minute Maid, Powerade, Schweppes, Simply, Sprite, Vitamin Water and more.
Third Quarter 2021 Earnings Highlights:
On Wednesday, October 25th, 2021 Coca Cola reported its third quarter fiscal 2021 earnings results. Total revenue came in at $10.04 billion, up 14% year-over-year. EPS (Earnings Per Share) came in at $0.64, vs. $0.58 estimated.
Net income rose to $7 billion, up 28% year-over-year. EPS (Earnings Per Share) came in at $0.82, vs. $0.76 estimated. BofA’s strong quarterly performance was largely due to strong operating leverage, as revenues grew faster than expenses.
Conclusion:
The quarter’s strong performance was largely due to a significant increase in its marketing and advertising spending. The company said that they nearly doubled their marketing expenses, driving growth across North America, Europe, Latin America, and Asia-Pacific.
Chairman, CEO James Quincey said that the company is emerging ‘’as a stronger business,’’ from the covid pandemic. As lockdown restrictions continue to ease globally, Coca Cola may be poised for a strong comeback in 2022. They are set to report their fourth quarter fiscal 2021 earning results on Thursday, February 10th, 2021 at 8:30AM EST before market open.
Chevron Corporation (NYSE: CVX)
Percentage of Portfolio: 0.99%
Number of Shares Held: 28,703,519
Berkshire Hathaway’s Total Value: $2,911,972,000
Chevron Corporation is an American multinational energy company. It is one of the successors of Standard Oil, which was broken up as a result of a lawsuit by the U.S. government.
Chevron is one of the world’s largest companies, and the second largest oil company in the United States, behind ExxonMobil. The company is engaged in every aspect of oil and natural gas, ranging from hydrocarbon, oil refinery, marketing & transport, chemical manufacturing and power generation.
Fourth Quarter 2021 Earnings Highlights:
On Friday, January 28th, 2022 Chevron reported its fourth quarter fiscal 2021 earnings results. Total revenue came in at $48.13 billion vs. $45.69 billion estimated. EPS (Earnings Per Share) came in at $2.56, below the $3.16 consensus.
Despite Chevron’s profit coming in below analyst estimates, the company saw record free cash flow of $21.1 billion. During the quarter they also reduced their debt liabilities by $12.9 billion. As a result, the company hiked their quarterly dividend to $1.42 per share.
Conclusion:
During the week, the benchmark Brent Crude Oil price topped $90.00 per barrel for the first time since October 2014. The price has more than doubled since the pandemic lows of 2020. With record free-cash flow, and sustained commodity prices, Chevron remains a top Warren Buffett stock for 2022.
Disclosure: The author holds no position in Apple Inc, American Express Co, Bank of America, Coca Cola Co, or Chevron Corporation. Freedom Stocks has a disclosure policy.
