In this article we discuss the 5 best stocks to buy according to Warren Buffett. If you want to read our detailed analysis of Buffett’s history and hedge fund performance, go directly to the 10 Best Stocks to Buy According to Warren Buffett.
5. The Kraft Heinz Company (NASDAQ: KHC)
Buffet’s Stake Value: $13,025,393,000
Percent of Warren Buffett’s 13F Portfolio: 4.81%
Number of Hedge Fund Holders: 33
The Kraft Heinz Company (NASDAQ: KHC) is fifth on our list of the best stocks to buy according to Warren Buffett. Berkshire Hathaway owns over 325 million shares of the company, worth $13 billion. The Kraft Heinz Company (NASDAQ: KHC) is the third-largest food and beverage company in North America.
Warren Buffett’s Berkshire Hathaway published its Q4 2020 Investor Letter. Here is what the investment management firm has to say about The Kraft Heinz Company (NASDAQ: KHC).
“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)
Buffet’s Stake Value: $21,083,999,000
Percent of Warren Buffett’s 13F Portfolio: 7.79%
Number of Hedge Fund Holders: 61
The Coca-Cola Company (NYSE: KO) is an American multinational beverage company with an interest in manufacturing, retailing, and marketing non-alcoholic beverages. It is one of the best stocks to buy according to Warren Buffett, as Berkshire Hathaway has over 400 million shares in the company, worth $21.08 billion. The Q1 2021 reports of the company show the 5% growth in net income to $9.0 billion, compared with $8.6 billion in Q4 2020.
3. American Express Company (NYSE: AXP)
Buffet’s Stake Value: $21,443,817,000
Percent of Warren Buffett’s 13F Portfolio: 7.92%
Number of Hedge Fund Holders: 53
American Express Company (NYSE: AXP) is a financial services corporation with over 114 million cardholders and customers in around 40 countries. Warren Buffett’s Berkshire Hathaway has over 151.6 million shares in the company, worth $21.4 billion, as of Q1 2021. Berkshire has owned American Express stock for more than 25 years, making it one of the best stocks to buy according to Warren Buffett.
American Express Company (NYSE: AXP) has a long history of paying dividends, with a 9.1 % per year growth in its distribution since 2011. The company will pay a quarterly dividend of $0.43 per share on 10th August 2021.
Bretton Fund, in its Q4 2020 Investor Letter, has highlighted a few stocks, including American Express Company (NYSE: AXP). Here is what the fund said.
“American Express has elements of both a bank (it extends credit card loans) and a payments processor (most of its revenue is fees from cardholders and merchants) and was hit pretty hard by Covid-19, though we expect most of the impact will be transitory. It has a relatively diversified customer base overall, but a meaningful portion of its card activity is from business travel, which…there wasn’t a lot of last year. Similar to the banks, American Express recognized loan losses in anticipation of large defaults, though it’s not clear all of that will come to pass. Its stock returned -1.1%, while earnings per share were down 53%.”
2. Bank of America Corporation (NYSE: BAC)
Buffet’s Stake Value: $39,080,793,000
Percent of Warren Buffett’s 13F Portfolio: 14.45%
Number of Hedge Fund Holders: 97
Bank of America Corporation (NYSE: BAC) is an American multinational investment bank and financial services holding company. It is one of the world’s leading financial institutions, offering services in banking, investing, asset management, and other financial management products. It is one of the best stocks to buy according to Warren Buffett, as Berkshire Hathaway has over 1 billion shares in the company, worth $30.61 billion. Bank of America Corporation’s (NYSE: BAC) stock price has soared by over 40% this year.
ClearBridge Investments has published its ‘Sustainability Leaders Strategy’ Q1 2021 investor letter. Here is what ClearBridge Investments has to say about Bank of America Corporation (NYSE: BAC) in its first-quarter 2021 investor letter.
“Higher long-term interest rates supported financials such as Bank of America, which has shown both defensive and offensive characteristics in the past year. We believe it continues to be the least risky large bank from a credit standpoint, with conservative underwriting and controlled risk taking, a leading consumer deposit franchise, scale and technology. It is also a leader in its commitments to sustainability, or as it terms it, responsible growth. Disclosure and reporting at all levels form a large part of this commitment, including gender diversity and equality, environmental commitments and support of communities in which it operates. In the first quarter Bank of America announced it is setting a goal of net-zero greenhouse gas (GHG) emissions in its supply chain and operations, and notably also in its financing activities, before 2050.”
1. Apple Inc. (NASDAQ: AAPL)
Buffet’s Stake Value: $108,363,609,000
Percent of Warren Buffett’s 13F Portfolio: 40.07%
Number of Hedge Fund Holders: 127
Apple Inc. (NASDAQ: AAPL) tops our list of the best stocks to buy according to Warren Buffett. This global technology company mainly designs, manufactures, and sells digital gadgets. Berkshire Hathaway has nearly 890 million shares of Apple stock, worth $108.3 billion, as of Q1 2021. Over the last decade, Apple Inc. (NASDAQ: AAPL) has been a great investment, with shares returning 900% and revenues increasing by 154% during that time. The reports from Q2 show that the annual revenue of the company grew by 54% at $86.9 billion, with $1.40 earnings per share. The board also announced a $0.22 dividend per share for the quarter.
Distillate Capital, an investment management firm, published its first-quarter 2021 investor letter. Here is what it has to say about Apple Inc. (NASDAQ: AAPL).
“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.”
Yo can also take a peek at 10 Best Stocks to Buy According to David Einhorn’s Greenlight Capital and 10 Best Cryptocurrencies to Invest in According to Hedge Fund Billionaires.
