Got an extra $1,000 in idle cash you’re not quite sure how to put to work? Why not poach a pick or two (or more) from Warren Buffett’s Berkshire Hathaway(NYSE: BRK.A)(NYSE: BRK.B) portfolio? He’s not called the Oracle of Omaha for nothin’, after all. Berkshire Hathaway shares regularly outperform the broad market! You may well do the same by holding some of the same stocks.
To this end, here’s a closer look at three of Berkshire’s positions that might be at home in your portfolio too. In no particular order…
Coca-Cola (NYSE: KO) is admittedly boring compared names like Nvidia or artificial intelligence outfit Palantir Technologies. But, that’s kind of the point. What this drinks giant lacks in pizzazz it makes up for in predictable, reliable performance.
Credit the nature of the business and how well the company manages its sliver of it, mostly. Consumers can be fickle, not to mention price-sensitive. Coca-Cola is very, very good at keeping its customers on-board though, with a savvy combination of advertising as well lifestyle marketing. Branding consultant Interbrands rates Coca-Cola as 2024’s seventh-best global brand name, right behind Toyota and just ahead of Mercedes-Benz.
And it’s not just a size thing. This ranking considers the underlying company’s ability to cost-effectively and consistently convert a brand name into revenue within a particular industry.
Coca-Cola isn’t just its namesake cola, of course. It’s also parent to Barq’s root beer, Gold Peak tea, Powerade sports drink, and Minute Maid juices just to name a few. It’s always got something to meet consumers’ ever-changing tastes. That’s one of the reasons it’s been able to raise its full-year dividend payout for 62 consecutive years now … which is perhaps the chief reason Buffett’s held a sizable position in the company since 1998. It’s grown to become Berkshire’s fourth-biggest holding, in fact, with shares steadily climbing for the past several years.
It will never be a high-octane holding, to be clear. It’s always been a high-quality holding, however, with no end to this strength in sight. You’d be plugging in while the forward-looking dividend yield stands at just over 3%.
Yes, Berkshire sold off a bunch of its Apple(NASDAQ: AAPL) position in 2024. Don’t lose perspective though. It’s not exactly a stretch to suggest that even Buffett and his lieutenants were getting a bit nervous about how big this holding had grown, particularly given all the uncertainty surrounding the U.S. presidential election and what the post-election economic environment might look like. The 300 million shares of Apple the conglomerate is still holding are collectively worth nearly $70 billion, which is still Berkshire’s biggest position at almost 23% of its total stock holdings.
Plenty of investors are still amazed he bought it at all, of course. For years Warren Buffett regularly eschewed technology stocks, arguing they were difficult to understand, in turn making it difficult to determine just how competitive their underlying companies were.
As time has marched on, however — and perhaps with some encouragement from the team around him — Buffett’s come around. He now seems to understand at least some aspects of Apple’s technology business, like making a point of manufacturing the world’s most functional smartphone and then developing a revenue-bearing digital ecosystem around it.
Whatever the exact reason Berkshire bought and has held onto a piece of Apple since 2016, there’s still plenty of growth opportunity ahead. Recent and future versions of the iPhone will be capable of handling generative artificial intelligence (AI) duties directly from the device rather than punting this work to the cloud, making its hardware more powerful (not to mention much faster) than alternative mobile devices. While consumers aren’t yet clamoring for such solutions, the growth opportunity is real. Precedence Research believes the generative AI market is set to grow at an annualized pace of 44% through 2034. It just needs a nudge to get the ball rolling, which it may get with just a bit more consumer education about all that AI can do.
Finally, one of Berkshire’s newest additions could be a good fit for you as well. That’s Domino’s Pizza(NASDAQ: DPZ). Buffett bought nearly 1.3 million shares of the pizza powerhouse in the third quarter of last year, worth roughly half a billion dollars.
It was a bit eyebrow-raising at the time. While it’s clearly not a technology name and the cash-driving company dominates the pizza delivery industry with a little over 21,000 locales, it’s still somehow different than the Oracle of Omaha’s usual picks.
Once you dig deeper into the business though, the trade makes a lot of sense.
For example, the pizza industry is cost-effectively scalable. Domino’s stores don’t need a lot of square footage, nor do they need a large crew to operate. Pizza ingredients are also relatively cheap, and pizza pricing can be as dynamic as it needs to be. That’s why — with the exception of early 2022’s post-pandemic turbulence and cooldown — this company’s top and bottom lines have proven impressively resilient.
DPZ Revenue (Quarterly) data by YCharts
This is turn has supported 11 consecutive years of annual dividend growth. And more than a little. The current quarterly payout of $1.51 per share is size times more than the per-share payment just a decade ago.
Pizza is also perpetually marketable, boosted by the fact that every region’s stores can readily and easily customize their menu to accommodate local preferences without changing the preparation process. That’s not something that can be said of most burger chains.
What’s the end result? Market research firm Technavio suggests the global pizza market is set to grow at an average yearly pace of 6.8% through 2028, which is fantastic for the restaurant business. It’s simply waiting for a company like Domino’s Pizza to bring its size and know-how to the table.
Before you buy stock in Coca-Cola, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Coca-Cola wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $818,587!*
Now, it’s worth notingStock Advisor’s total average return is938% — a market-crushing outperformance compared to177%for the S&P 500. Don’t miss out on the latest top 10 list.
Learn more »
*Stock Advisor returns as of February 7, 2025
James Brumley has positions in Coca-Cola. The Motley Fool has positions in and recommends Apple, Berkshire Hathaway, Domino’s Pizza, Nvidia, and Palantir Technologies. The Motley Fool has a disclosure policy.
The Best Warren Buffett Stocks to Buy With $1,000 Right Now was originally published by The Motley Fool
