If you want your investment portfolio to outperform the way Warren Buffett’s has, it’s important to hold stocks for long periods the way he does. When asked what an ideal holding period is for the stocks he adds to Berkshire Hathaway‘s (NYSE: BRK.A)(NYSE: BRK.B) equity portfolio, the Oracle of Omaha confidently says “forever” to anyone who will listen.
No matter how long you hold a stock, the price you pay factors into the strength of your return. If you want to invest like Buffett, buying stocks at opportune times is an important part of the strategy.
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Now could be a great time to scoop up a pair of Buffett stocks. At recent prices, $24.6 billion of Berkshire’s equity portfolio is invested in two companies that Wall Street has an eye on. Recently updated price targets from a couple of analysts at Citi suggest these stocks can climb 37% and 14% over the next 12 months.
1. Amazon
Buffett trimmed Berkshire’s Amazon(NASDAQ: AMZN) stake by about half a million shares in the third quarter and retained an even 10 million. Ronald Josey, a sell-side analyst at Citi, probably thinks Buffett should have held on to the entire position.
Amazon shares are up about 83% this year, but Josey thinks the rally could run higher still. He recently raised his price target on Amazon to $210, implying a 37% gain over the next 12 months.
Josey is encouraged by Amazon’s dominant position in America’s e-commerce industry. Its third-party retailers are locked into their relationship with Amazon, as evidenced by soaring ad sales. In addition to its standard take rate, Amazon was able to squeeze an extra $12.1 billion worth of ad payments from third-party merchants in the third quarter. That was 26% more than the previous year period, and this isn’t the company’s only big growth driver right now.
Amazon Web Services (AWS) is America’s largest provider of cloud services, and growth has been resilient this year despite a challenging macroeconomic environment. Third-quarter AWS revenue rose 12% year over year to $23 billion, and this segment has lots of room to run. The global market for cloud services reached $484 billion in 2022, and it’s expected to climb by 14.1% annually through 2030.
2. Coca-Cola
It didn’t start this way, but at more than $23 billion, Coca-Cola(NYSE: KO) is Berkshire Hathaway’s fourth-largest equity holding right now. Coca-Cola shares have declined about 8% in 2023, but Citi analyst Filippo Falorni expects a rebound in 2024. He recently raised his price target on the stock to $67 per share, which implies a 14% gain over the next 12 months.
Steadily increasing dividend payments are the main attraction for this stock. In February, Coca-Cola raised its payout for the 61st year in a row.
With exactly 400 million shares in its portfolio, Berkshire is in line to receive more than $736 million in dividends from Coca-Cola in 2024, assuming it maintains its long-running streak.
Fear that increasingly popular weight management drugs such as Mounjaro could hammer sales of sugary sodas has Coca-Cola’s stock price under pressure. The fear seems overblown. North American case volume didn’t rise in the third quarter, but it didn’t fall either.
Time to buy?
Amazon offers a chance for big gains on the back of some exceptional businesses. Amazon Web Services is the world’s largest provider of cloud services, and its e-commerce operation has logistical capabilities that its competitors can only dream of.
While Amazon has plenty of avenues for growth, there’s a lot of success already baked into its stock price. It’s been trading at a nosebleed-inducing multiple of 94 times trailing free cash flow. If earnings don’t rise sharply over the next few years, the stock could tank. If you don’t have a high tolerance for risk, it’s probably best to watch from a safe distance.
With some of the most recognized brands on the planet, Coca-Cola has all kinds of pricing power that allows it to overcome a long-running trend toward lower consumption of sugary sodas. If we ignore the negative effects of a stronger dollar, third-quarter revenue rose 11% year over year.
At recent prices, Coca-Cola shares offer a 3.1% yield and most likely a lot more by the time you’re ready to retire. For most investors, adding some shares to a diversified portfolio in 2024 and holding them for the long run isn’t a bad idea.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Citigroup is an advertising partner of The Ascent, a Motley Fool company. Cory Renauer has positions in Amazon. The Motley Fool has positions in and recommends Amazon 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.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
