In this article, we discuss 10 long-term stocks to buy and hold according to Warren Buffett. If you want to see more stocks in this selection, check out 5 Long-Term Stocks to Buy and Hold According to Warren Buffett.
Warren Buffett of Berkshire Hathaway is a legendary value investor who has made billions over the years from his investment portfolio. Buffett’s willingness to keep pouring money into the current stock market shows that the billionaire is optimistic about the US economy and the direction that equity markets are headed, even as the Federal Reserve remains on its brutal path of hiking interest rates incessantly. However, Warren Buffett slowed his buying spree in the second quarter, purchasing stocks worth $6.2 billion, compared to his aggressive stock acquisitions in the first quarter, worth $51.1 billion.
Buffett has been a long-term finance, energy, and tech bull. In the second quarter of 2022, the billionaire strengthened his positions in Ally Financial Inc. (NYSE:ALLY), Amazon.com, Inc. (NASDAQ:AMZN), and Occidental Petroleum Corporation (NYSE:OXY), among others. He believes in a long-term holding period for quality stocks.
The Oracle of Omaha’s success in the stock market is attributed to multiple factors, such as buying cyclical businesses, holding stocks for decades, and a portfolio ripe with dividend stocks. The billionaire investor leans towards a concentrated rather than diversified portfolio, as he thinks diversification is not imperative if investors know what they’re up against in the market. Almost 70% of the total Berkshire portfolio is represented by five of its top holdings – Apple Inc. (NASDAQ:AAPL), Bank of America Corporation (NYSE:BAC), The Coca-Cola Company (NYSE:KO), Chevron Corporation (NYSE:CVX), and American Express Company (NYSE:AXP).
We used the second quarter portfolio of Warren Buffett’s Berkshire Hathaway for this analysis, selecting the securities that have been part of the Berkshire portfolio for at least 10 years. The hedge fund sentiment around the stocks was gauged from Insider Monkey’s Q2 2022 database of around 900 hedge funds.
Long-Term Stocks to Buy and Hold According to Warren Buffett
10. DaVita Inc. (NYSE:DVA)
Number of Hedge Fund Holders: 28
Berkshire’s Holding Period: 11 Years
DaVita Inc. (NYSE:DVA) is a Colorado-based company that provides kidney dialysis services. Warren Buffett has consistently held a position in the company since Q4 2011, and in the second quarter of 2022, the billionaire owned more than 36 million shares of DaVita Inc. (NYSE:DVA) worth $2.8 billion, representing 0.96% of the total 13F holdings.
On August 19, UBS analyst Andrew Mok upgraded DaVita Inc. (NYSE:DVA) to Buy from Neutral, lifting the price target to $117 from $106. The shares provide a favorable risk/reward, which skews 2-to-1 to the upside, the analyst told investors. The analyst believes in DaVita Inc. (NYSE:DVA)’s ability to deliver operating income growth in 2023, driven by solid visibility into cost saving initiatives. He sees 30% upside to present share levels from earnings growth alone and said the passage of Restore Protections for Dialysis Patients Act, or H.R.8594, “could catalyze a multiple re-rating later this year”.
According to Insider Monkey’s data, 28 hedge funds were bullish on DaVita Inc. (NYSE:DVA) at the end of June 2022, compared to 35 funds in the earlier quarter. Jeffrey Gates’ Gates Capital Management is a significant position holder in the company, with roughly 1.8 million shares worth $143.3 million.
In addition to Ally Financial Inc. (NYSE:ALLY), Amazon.com, Inc. (NASDAQ:AMZN), and Occidental Petroleum Corporation (NYSE:OXY), Warren Buffett remains bullish on DaVita Inc. (NYSE:DVA).
9. United Parcel Service, Inc. (NYSE:UPS)
Number of Hedge Fund Holders: 38
Berkshire’s Holding Period: 12 Years
United Parcel Service, Inc. (NYSE:UPS) is an American multinational delivery, transportation, and logistics company. Warren Buffett added United Parcel Service, Inc. (NYSE:UPS) to his portfolio in Q4 2010 and has consistently held his stake over the years. As of Q2 2022, the billionaire owns 59,400 shares of the company worth about $11 million. United Parcel Service, Inc. (NYSE:UPS) declared on August 4 a $1.52 per share quarterly dividend, in line with previous. The dividend is payable on September 1, to shareholders of record on August 15. The stock delivers a dividend yield of 2.95% as of August 23.
Evercore ISI analyst Jonathan Chappell on August 22 downgraded United Parcel Service, Inc. (NYSE:UPS) to In Line from Outperform with a $214 price target. As a “global enterprise with significant exposure to the consumer economy”, the unpredictable macro environment, especially related to consumer spending, provides “further questions about” a recovery in demand and could pressure earnings estimates for the second half of 2022 and 2023, the analyst told investors.
Among the hedge funds tracked by Insider Monkey, 38 funds were bullish on United Parcel Service, Inc. (NYSE:UPS) at the end of the second quarter of 2022, compared to 50 funds in the earlier quarter. Phill Gross and Robert Atchinson’s Adage Capital Management is a prominent shareholder of the company, with 764,900 shares worth $139.6 million.
Here is what ClearBridge Large Cap Growth ESG Strategy has to say about United Parcel Service, Inc. (NYSE:UPS) in its Q2 2022 investor letter:
“Environmental impact is a major issue for the transportation industry, including logistics and freight companies such as portfolio holding United Parcel Service (NYSE:UPS). Recent engagements with the company have given us a better understanding of the challenges in lowering emissions in transport as well as where innovations may be coming from in the years ahead. In ESG-focused engagements in March and May 2022, we discussed UPS’s path to net-zero using science-based targets.
Though it has a 2050 net-zero goal in line with SBTi, UPS has issues complying with SBTi standards because aviation constitutes 60% of UPS’s Scope 1 and 2 emissions. This is an area over which UPS has little control, however, and the maximum exclusion for a source of emissions for SBTi approval is 5%. UPS has committed to a 2050 carbon neutral goal, which is the same as the SBTi’s goal, although UPS takes a different view of the first 15 years of the path, finding existing technology unable to warrant as aggressive a path as SBTi’s…” (Click here to see the full text)
8. U.S. Bancorp (NYSE:USB)
Number of Hedge Fund Holders: 43
Berkshire’s Holding Period: 12 Years
U.S. Bancorp (NYSE:USB) is an American bank holding company for the U.S. Bank National Association. The bank specializes in consumer banking, corporate banking, insurance, investment banking, mortgage loans, private equity, wealth management, and financial analysis. U.S. Bancorp (NYSE:USB) has featured on the Berkshire portfolio since the last quarter of 2010. In Q2 2022, the hedge fund held about 120 million shares of U.S. Bancorp (NYSE:USB), worth $5.5 billion, representing 1.83% of the total portfolio.
On July 12, Morgan Stanley analyst Betsy Graseck maintained an Equal Weight rating on U.S. Bancorp (NYSE:USB) and lowered the price target on the shares to $54 from $66. Morgan Stanley slashed estimates across its U.S. banks and consumer finance coverage as recession risks multiply. The analyst and her team are reducing 2023 EPS estimates by an average of 7% and target multiples in the group by an average of 8%, leading to a median 15% cut to price targets.
According to Insider Monkey’s data, 43 hedge funds were bullish on U.S. Bancorp (NYSE:USB) at the end of June 2022, up from 40 funds in the prior quarter. Jean-Marie Eveillard’s First Eagle Investment Management is a significant stakeholder of the company, with 9.5 million shares worth $439 million.
Here is what ClearBridge Investments Dividend Strategy has to say about U.S. Bancorp (NYSE:USB) in its Q4 2021 investor letter:
“Over the last year, we have repositioned our portfolio to navigate the course we see ahead. We have increased our exposure to interest-rate sensitive banks by adding to existing positions in U.S. Bancorp.”
7. Moody’s Corporation (NYSE:MCO)
Number of Hedge Fund Holders: 48
Berkshire’s Holding Period: 12 Years
Moody’s Corporation (NYSE:MCO) is a New York-based risk assessment firm that operates through Moody’s Investors Service and Moody’s Analytics segments. Warren Buffett acquired a stake in Moody’s Corporation (NYSE:MCO) in Q4 2010, and he has owned the position steadily over the years. In the second quarter of 2022, Berkshire Hathaway had 24.6 million Moody’s Corporation (NYSE:MCO) shares in its portfolio, worth $6.70 billion, representing 2.23% of the total 13F securities.
Oppenheimer analyst Owen Lau on August 19 raised the price target on Moody’s Corporation (NYSE:MCO) to $348 from $313 and kept an Outperform rating on the shares. The analyst sees early signs, such as latest fund flows and IG/HY spreads, indicating that issuance supply and demand could touch equilibrium soon. Apart from financial institutions, Q3 issuance remains challenging, but the analyst is bullish on the long-term trend and Moody’s Corporation (NYSE:MCO)’s competitive market position.
Among the hedge funds tracked by Insider Monkey, Chris Hohn’s TCI Fund Management is one of the leading stakeholders of the company, with 8.2 million shares worth $2.2 billion. Overall, 48 hedge funds were bullish on Moody’s Corporation (NYSE:MCO) at the end of June 2022, compared to 56 funds in the last quarter.
Here is what Qualivian Investment Partners has to say about Moody’s Corporation (NYSE:MCO) in its Q2 2021 investor letter:
“Moody’s: Revenue, operating profit margins, and EPS all exceeded expectations, and annual guidance for these items (and for free cash flow) was raised. In MIS (Moody’s Investors Service) which houses the traditional ratings business, the outlook for debt issuance was raised for the remainder of the year, while MA (Moody’s Analytics) also came in ahead of expectations. The company leveraged strong revenue growth with strong operating profit margin improvement of 200 bps, with EPS coming in $0.22 ahead of consensus estimates. Management alluded to having interesting opportunities in their M&A pipeline, which we will have to assess when the time comes, but Moody’s management team has been very effective at allocating capital in the past toward value-creating bolt-on acquisitions, especially in their Moody’s Analytics business, a key growth driver for the company.”
6. The Coca-Cola Company (NYSE:KO)
Number of Hedge Fund Holders: 60
Berkshire’s Holding Period: 12 Years
The Coca-Cola Company (NYSE:KO) has been part of the Berkshire portfolio since the last quarter of 2010. It is one of the favorite long-term Warren Buffett stocks. In the second quarter of 2022, Berkshire Hathaway had 400 million shares of The Coca-Cola Company (NYSE:KO), worth over $25 billion, representing 8.38% of the total 13F securities.
On July 26, after posting market-beating Q2 results, The Coca-Cola Company (NYSE:KO) raised its full-year guidance. The company expects organic revenue growth of 12% to 13%, versus the earlier estimate of 7% to 8% growth. Comparable EPS growth of 5% to 6% was maintained by the company, in line with Wall Street consensus. The Coca-Cola Company (NYSE:KO) forecasts a $0.03 reduction in full-year EPS due to its exit from Russia. On July 27, Deutsche Bank analyst Steve Powers raised the price target on the stock to $65 from $64 and kept a Hold rating on the shares after the Q2 results.
According to Insider Monkey’s database, The Coca-Cola Company (NYSE:KO) was part of 60 hedge fund portfolios in the second quarter of 2022, compared to 64 funds in the last quarter. Ray Dalio’s Bridgewater Associates is one of the biggest position holders in the company, with 10.82 million shares worth $680.7 million.
Like Ally Financial Inc. (NYSE:ALLY), Amazon.com, Inc. (NASDAQ:AMZN), and Occidental Petroleum Corporation (NYSE:OXY), smart investors are piling into The Coca-Cola Company (NYSE:KO).
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Disclosure: None. 10 Long-Term Stocks to Buy and Hold According to Warren Buffett is originally published on Insider Monkey.