Three Notable Berkshire Hathaway Shares to Invest in during November
Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) is renowned for its globally watched investment portfolio, filled with numerous stocks and exchange-traded funds (ETFs) approved by the legendary investor Warren Buffett. If you're exploring new investment opportunities, it might be wise to observe Buffett's latest purchases.
Berkshire reduced its stock holdings considerably last year, increasing its cash reserves to record levels. Some speculated that Buffett was preparing for a potential market downturn. Yet, Berkshire continues to possess a robust portfolio filled with long-term growth stocks, such as Apple (AAPL 1.88%), Coca-Cola (KO 0.16%), and Amazon (AMZN 0.73%).
1. Apple
Berkshire began amassing Apple shares in 2016. It sold a substantial portion of its holdings recently, but its remaining $70 billion investment in Apple still makes up over 20% of its portfolio, making it its largest single investment.
Apple's reliance on the iPhone for revenue has seen some stagnation in recent years. However, the company retains a strong brand, significant pricing power, a sticky ecosystem, and a convincing moat. With $157 billion in cash and marketable securities, Apple has ample resources to expand its business with strategic investments and acquisitions. It has previously bought back 35% of its shares over the past decade and has increased its dividend payouts for 13 consecutive years.
Analysts predict Apple's revenue and earnings per share (EPS) to expand by 8% and 10%, respectively, by the fiscal year 2025 (which ends in September 2025). This growth is likely to be driven by steady iPhone sales, the expansion of its services ecosystem, and the introduction of new generative artificial intelligence (AI) services. While Apple's stock is not cheap with a forward price-to-earnings ratio (P/E) of 30 and a minimal forward dividend yield of 0.5%, it is anticipated to remain a stable choice for both bull and bear market situations.
2. Coca-Cola
Berkshire began investing in Coca-Cola in 1988. It has not made any significant purchases or sales over the past 12 years, yet its $26 billion stake in the beverage giant amounts to 8.5% of its overall portfolio, ranking as its fourth-largest investment.
Over the years, Coca-Cola has countered declining soda consumption by introducing more brands of beverages, including bottled water, teas, juices, sports drinks, coffee, and even alcoholic drinks. It has refreshed its soda line by launching new flavors, smaller serving sizes, and healthier options. This evolution has facilitated consistent growth in its organic sales and its status as a Dividend King with 62 consecutive years of dividend increases. It has also repurchased about 15% of its shares over the past three decades.
For 2024, Coca-Cola anticipates its organic sales to grow by 10% and its EPS to increase by 5% to 6%. Analysts expect Coca-Cola's reported revenue and EPS to grow by 9% and 14%, respectively. For 2025, they forecast its revenue and EPS to grow by 4%. Despite facing challenges from inflation and a strong dollar, Coca-Cola has effectively offset pressures with price hikes over the past two years. Although Coca-Cola's stock is still reasonably priced at a forward P/E ratio of 22, its forward dividend yield of 3% becomes even more attractive as interest rates decrease.
3. Amazon
Berkshire began investing in Amazon in 2019. It reduced its position slightly in 2023 but still maintains a substantial $2 billion stake, representing 0.6% of its portfolio. As the world's foremost e-commerce and cloud infrastructure platform company, Amazon is a cash-generating giant with a strong moat. Its ability to subsidize its lower-margin retail business with its higher-margin cloud business provides it with a distinct edge over many competitors.
Amazon's growth exponentially increased during the pandemic as more individuals shopped online and businesses upgraded their cloud services. However, its growth slowed down dramatically over the past two years as it faced tougher economic conditions.
Despite the slowdown, Amazon's growth has gradually stabilized as the economy stabilized. Its e-commerce sales have rebounded as it streamlined its delivery service, boosted sales of everyday essentials, and expanded into more international markets. Its cloud services growth accelerated again as businesses upgraded their cloud infrastructure to support the latest generative AI applications.
Analysts anticipate Amazon's revenue and EPS to expand by 11% and 63%, respectively, this year. In 2025, they expect its revenue and EPS to increase by 11% and 22%, respectively, as its near-term headwinds subside. Although Amazon's stock might not appear as cheap with a forward P/E ratio of 34, it is historically inexpensive and will continue to be a top choice for the long-term growth of the e-commerce and cloud markets.
- Investment strategy: Berkshire Hathaway's strategic approach to investing in companies like Apple, Coca-Cola, and Amazon includes holding onto strong, long-term growth stocks, even as it may reduce its position in certain holdings to increase its cash reserves, as seen with its Apple investment.
- Finance and returns: By investing in high-performing stocks such as Apple and Coca-Cola, Berkshire Hathaway is able to generate significant returns on its investment, with Apple's $70 billion stake accounting for over 20% of the portfolio and Coca-Cola's $26 billion stake representing 8.5% of the total portfolio, highlighting the importance of diversification and extended financial commitment in finance.
