Warren Buffett’s Billion-Dollar Bet: Uncovering the Stocks He’s Holding Onto
As the market continues to soar, Warren Buffett’s Berkshire Hathaway has been quietly unloading a staggering $133 billion worth of stocks through the first nine months of 2024. While Buffett has reduced his massive stake in Apple and sold nearly a quarter of his Bank of America holding, there are two stocks he’s choosing not to sell – and it’s worth exploring why.
The Coca-Cola Conundrum
Coca-Cola, a stalwart in Berkshire’s portfolio, has been a testament to Buffett’s investing prowess. He first invested in the company in 1988, when its stock fell sharply in the Black Monday crash. Despite the decline, Coca-Cola was growing earnings at double-digit rates and had tremendous international growth opportunities. Buffett pounced, investing a fifth of Berkshire’s equity in Coke stock. Today, those shares are worth $25 billion and pay out $776 million in annual dividends.
While Coca-Cola may not be the high-growth company it once was, management expects to grow revenue marginally faster than the 4% historical growth rate of the global beverage industry. With a strong brand and consistent sales performance, Coca-Cola is an attractive stock for those seeking passive income.
American Express: A Wide Competitive Moat
Berkshire has held a large stake in American Express stock for 30 years, and as of Q3 2024, it still holds 151 million shares. Buffett has patiently held the stock, allowing it to compound in value with the growth of the business. American Express has built a strong brand on customer service and a card membership model, earning $12.5 million in 1964, $1.4 billion in 1994, and $9.9 billion over the past year.
The company’s recurring revenue, driven by net card fees, gives it a competitive edge. Despite recent weakness in consumer spending, total transaction volumes grew 6% over the past year. With analysts expecting earnings to grow at an annualized rate of about 14% over the long term, American Express is poised for continued success.
What Does Buffett See That We Don’t?
While both Coca-Cola and American Express may not be the cheapest stocks on the market, Buffett’s continued faith in these companies speaks volumes about their competitive advantages and growth prospects. As investors, it’s essential to understand what drives Buffett’s investment decisions and how we can apply those principles to our own portfolios.
Discover the Stocks That Made the Cut
Before investing in Coca-Cola or American Express, consider the top 10 stocks identified by The Motley Fool Stock Advisor analyst team. These stocks have the potential to produce monster returns in the coming years. With a proven track record of success, Stock Advisor provides investors with a blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month.
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