Under the leadership of CEO Warren Buffett, Berkshire Hathaway (BRK.A 0.27%) (BRK.B 0.23%) rose to become one of history’s most successful investment conglomerates. With a market capitalization of approximately $710 billion, Berkshire ranks as the world’s sixth-largest company, and it’s delivered life-changing gains for investors who held shares across its meteoric rise.
Long-term Berkshire shareholders have enjoyed a gravity-defying run of market-crushing returns, and the company remains one of the best-managed businesses in the world. With that in mind, let’s look at two Buffett-backed stocks that are worth buying this month and holding on to forever.
Compared to other companies in Berkshire’s portfolio, the investment conglomerate has admittedly taken a somewhat cautious approach to Amazon (AMZN -0.47%) stock. While Buffett was self-effacing enough to call himself an “idiot” for missing out on the meteoric rise for the tech giant’s valuation, his company made a relatively small move into the stock back in 2019 and has yet to add more shares (according to its most recent 13F filing). Amazon stock accounts for less than 1% of Berkshire’s total equity portfolio, but it could be one of the best buys on the market for growth-oriented investors.
Facing high levels of inflation and rising interest rates, the market’s appetite for growth stocks has been much weaker compared to where it’s been over the last three years. Rising expenses, the evaporation of pandemic-driven e-commerce demand, and slowing growth for Amazon Web Services in the face of some broader economic slowdown have also worked to depress the tech titan’s valuation. With the stock still down roughly 45% from its high even after some recovery momentum early in 2023’s trading, investors still have an opportunity to build a position in this fantastic company at a price that opens the door for portfolio-elevating returns.
Amazon remains a clear category leader in the e-commerce and cloud-infrastructure services industries, and macroeconomic headwinds that are tamping down on sales and profitability in these categories will likely recede at some point and give way to much stronger overall business performance.
Beyond these two main pillars, the company’s digital advertising unit is rapidly becoming a performance driver in its own right and has been expanding at a rapid pace despite the broader digital ads market being in somewhat of a slump. What’s more, the market seems to be underestimating the potential for artificial intelligence technologies to have highly beneficial impacts across several of the company’s business segments.
Whether or not Buffett and Berkshire ultimately make a much bigger push into the stock, Amazon continues to look like a great long-term investment.
2. Berkshire Hathaway
If you’re looking to take a balanced approach to portfolio composition and want to add stock holdings that have expertly managed risk-reward profiles, buying Berkshire Hathaway shares is a no-brainer. Owning Berkshire stock is like having Buffett, co-chairman Charlie Munger, and the company’s portfolio managers and teams of analysts working to generate returns on your investment, and the investment conglomerate has an absolutely stellar track record when it comes to outperforming the broader market.
As Buffett recently said, he and Munger aren’t stock pickers — they’re business pickers. This guiding philosophy has undeniably served the company and its shareholders well.
As of this writing, Berkshire’s stock portfolio is valued at approximately $346 billion, and its biggest equity positions are Apple, Bank of America, Chevron, Coca-Cola, and American Express. In addition to public stock holdings, Berkshire has large positions in some private businesses, and it also has fully owned subsidiaries including top railway businesses, leading insurance providers including GEICO and Alleghany, and consumer discretionary businesses including Fruit of the Loom, Duracell, and See’s Candies.
Berkshire’s massive size and approach to portfolio composition mean that its days of explosive, multibagger returns are likely in the past, but the stock remains a good pick for those seeking investments with relatively low risk profiles that can still deliver market-beating performance. As Buffett has said, his first rule when it comes to investing is “don’t lose money,” but it would be an understatement to say he’s also been pretty good at making it.
With its value-oriented approach and proven expertise when it comes to risk management, Berkshire is a company that can weather market volatility and deliver solid returns for long-term shareholders.
American Express is an advertising partner of The Ascent, a Motley Fool company. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Bank of America is an advertising partner of The Ascent, a Motley Fool company. Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon.com, Apple, Bank of America, and Berkshire Hathaway. The Motley Fool recommends the following options: long January 2024 $47.50 calls on Coca-Cola. The Motley Fool has a disclosure policy.