Warren Buffett’s investment approach has proven wildly successful over time. Berkshire Hathaway‘s (NYSE: BRK.A) (NYSE: BRK.B) stock performance has consistently outpaced most major market indices since Buffett took control in 1965. His strategy involves concentrating investments in companies with strong business models and ultra-long-term growth trajectories.
Three of Buffett’s largest holdings stand out for their stability and growth potential in the current market. These companies — Apple (NASDAQ: AAPL), Bank of America (NYSE: BAC), and American Express (NYSE: AXP) — represent a significant portion of Berkshire Hathaway’s stock portfolio and are well-positioned to deliver above average returns for shareholders. Read on to find out more.
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Apple: A wide-moat tech giant
Apple represents a substantial 43.5% of Berkshire’s stock portfolio, underscoring Buffett’s confidence in the tech giant. While the stock’s dividend yield is modest at 0.43%, its price-to-earnings ratio of 34.8 reflects high market expectations.
Analysts are optimistic about Apple’s future, particularly with the anticipated rollout of Apple Intelligence. This development is expected to significantly boost earnings and revenue. Forecasts suggest a 15.6% increase in top-line growth over 2024 and 2025, an impressive projection for a mature company with a $3.44 trillion market cap.
Apple’s strength lies not just in its hardware but also in its software and services segment, which generated $85.2 billion in revenue in fiscal 2023, accounting for 22% of total revenue.
The company’s ecosystem, encompassing cloud services, digital ads, Apple Pay, Apple Card, Apple Music, Apple TV+, and the App Store, creates a robust platform for customer retention and profitability.
In early May 2024, Apple made headlines with a $110 billion share repurchase authorization, the largest in U.S. history. While this is a budget rather than a guarantee, Apple’s track record of significant buybacks — more than $20 billion in three of the past four quarters and $81.82 billion over the past year –…
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