Warren Buffetts Top Three Stocks – BUY BUY BUY
Apple – American Express – Berkshire Hathaway
The oracle of Omaha has seen it all. Surviving 3 wars, 4 serious recessions , 911 events and is still at the top of his game. He has beaten the S&P buy more than 100% over 50 yrs . His largest purchase for Q4 2019 was his own shares , buying $2.2 billion . his largest purchase by far, adding huge shareholder value . Berkshire sits with $125 Billion in cash and hopefully he is using it now .
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Recently Buffetts portfolio has seen a decline of 27% from $203 Billion to $148 Billon . It has since rebounded 11 %
But which Berkshire Hathaway stocks are worth buying during this downturn? Here are some ideas, straight from Buffett’s portfolio, that are likely to perform well over the long haul: Apple (NASDAQ:AAPL), American Express (NYSE:AXP), and Berkshire Hathaway itself.
Probably one of the best ideas investors can take from Buffett is Berkshire’s largest stock holding by far: Apple. Berkshire has a 5.6% stake in the tech giant.
“It’s probably the best business I know in the world,” Buffett said when asked about his Apple stock in a February interview with CNBC. The famed investor added that, since Apple is Berkshire’s third-largest business after its insurance and railroad subsidiaries, he doesn’t even think of the holding as a stock. Instead, “I think of it as our third business,” Buffett said.
Recently, Apple withdrew its fiscal second-quarter revenue guidance as it copes with supply shortages and weakened consumer demand in an economy that came to a screeching halt. But the tech company has the wherewithal to take this setback in stride. Apple generated $64 billion in trailing-12-month free cash flow, or the cash left after regular operations and investments are covered. And it has nearly $100 billion of net cash on its balance sheet.
With AAPL shares down about 20% from an all-time high of $328, this is a great opportunity for investors to buy this tech stock.
2. American Express
Shares of American Express have been absolutely pummeled. The stock is down 39% from a high achieved in February. Investors are likely concerned about payment volumes declining, something that would hurt American Express’ revenue from fees on transactions. In addition, the company’s lending business could be at risk if consumers have trouble paying their bills.
But the stock’s sharp decline has arguably more than priced in a likely period of suppressed consumer spending and the risks associated with consumer debt. The stock trades at just 10.5 times earnings and boasts a 2% dividend yield.
American Express is Berkshire’s fourth-largest stock holding, worth $13 billion.
3. Berkshire Hathaway
Finally, there’s Berkshire Hathaway itself. Believe it or not, Berkshire stock was Buffett’s biggest purchase in Q4. The company repurchased $2.2 billion worth of its own shares, more than all of Berkshire’s other stock purchases during the quarter combined.
If Buffett thought buying its own stock was a great idea during Q4, imagine what he thinks now that the stock is trading 19% below levels in mid-February, and about 10% lower than the lowest price Berkshire traded at during Q4.
What’s particularly exciting about Berkshire stock today, however, is its massive cash balance. The company finished 2019 with $125 billion of cash, cash equivalents, and U.S. Treasury bills. While this stockpile weighed on results in 2019 since it wasn’t deployed in a profitable, growing business, it serves as a major opportunity during this 2020 coronavirus market crash, giving Buffett a loaded elephant gun just as great deals are surfacing.
By betting on Berkshire, investors are essentially betting that Buffett can spend some of this $125 billion opportunistically durring this market collapse.
Apple, American Express, and Berkshire Hathaway, in particular, look like three Warren Buffett stocks that can beat the market over the long haul and reward shareholders handsomely, especially if investors buy them while they’re beaten down.
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