Investors around the world understandably pay close attention to how Warren Buffett, the CEO of Berkshire Hathaway and arguably the world's greatest living investor, puts his staggering fortune of more than $80 billion to work.
Of course, the bulk of that wealth is held in the form of shares of Berkshire Hathaway, where Buffett and his two most trusted stock pickers, Ted Weschler and Todd Combs, manage an enviable portfolio of industry-leading businesses.
That certainly doesn't mean all investors should simply mimic the positions in Berkshire's portfolio, which have been built using an enormous base and at widely varying cost bases. But that raises the question: Are there any "Warren Buffett stocks" worth buying today?
Read on to see why three of our top Motley Fool contributors think Costco(NASDAQ: COST), Apple(NASDAQ: AAPL), and Amazon.com(NASDAQ: AMZN) could be worth considering.
Close-up of Warren Buffett's face.
IMAGE SOURCE: THE MOTLEY FOOL.
A beacon of perennial strength in retail
Steve Symington (Costco): It's no mystery Warren Buffett admires durable businesses with sustainable moats -- so it should be equally unsurprising that Berkshire Hathaway currently owns a 1% stake in Costco worth nearly $1.2 billion.
The discount warehouse retailer has consistently thrived despite the rise of low-margin online competitors, thanks largely to the combination of its own bare-bones operating structure, steadily growing store base, exceedingly loyal paid members, and even its own e-commerce initiatives (where comparable sales soared 22% in its most recent quarter). What's more, Costco is set to even further streamline its business with plans to add self-checkout kiosks to hundreds of higher-volume locations in the coming months.
That said, with shares trading at all-time highs right now, it's clear the market has rewarded Costco for its relative outperformance. But with a healthy dividend yielding around 1% annually at today's prices and no signs of its underlying business losing momentum, I think the stock is still worth buying for patient, long-term shareholders.
Buffett's biggest bet
Keith Noonan (Apple): Berkshire making Apple its biggest stock holding represents a valuable vote of confidence, but investors have had to contend with declining iPhone sales and the possibility that the tech business will no longer be able to rely on its handset lines to drive growth. That poses a significant risk for Apple, but the company still looks to be in pretty good position to thrive over the long term. Between the opportunities in further building out its software and services ecosystem and introducing devices that present bigger technological leaps compared to the iterative improvements that have come to define the mobile market, it would be a mistake to think Apple's growth avenues have been closed off.
The iCompany already captures a portion of third-party sales made through the App Store, and it's made a push into subscription entertainment offerings with services like Apple Music. These initiatives helped services revenue grow 16% year over year last quarter, and the segment still has gas in the tank. The company is launching its own video streaming and gaming services, and management sees a substantial growth opportunity in payment services, as more users make in-app purchases and mobile becomes even more integrated into everyday business.
The company should also have chances to reenergize its handset sales with feature additions that represent more dramatic upgrades than the ones delivered in recent years, and opportunities in categories like smart-home technologies and wearables suggest the company still has long-term avenues to growth in the hardware space. If product categories like augmented reality take off, it seems like a solid bet that Apple will be at the forefront. The company not only managed to pioneer the smartphone, it managed to build one of the world's most valuable lifestyle brands. Coupled with its design expertise, that's an advantage that should help it lead the next big tech shifts.
An e-commerce play with a lot more up its sleeve
Chris Neiger (Amazon.com): Warren Buffett's Berkshire Hathaway snatched up shares of Amazon in the first quarter of this year, and any time the famed investor's company makes an investment move, it's worth taking a closer look. Amazon is, of course, the largest online retailer in the U.S., with about 38% of all e-commerce sales in the country occurring on its platform.
Amazon's lead in the e-commerce market has given the company a substantial advantage, and considering that just 10% of all U.S. retail sales happen online right now, there's still tons of room for more growth.
Aside from Amazon's e-commerce dominance, the company also makes money from its growing advertising business, which is the third-largest digital ad company in the U.S., and its Amazon Web Services (AWS) cloud computing company. AWS is Amazon's key profit generator right now and is the leading cloud computing service. With cloud computing poised to become a $278 billion market by 2021, Amazon will surely benefit for years to come.
With its strong e-commerce business, promising advertising opportunities, and dominance in the cloud computing market, Amazon is the fantastic company investors are looking for: one that still has lots of potential for more share price gains.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Chris Neiger has no position in any of the stocks mentioned. Keith Noonan has no position in any of the stocks mentioned. Steve Symington has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon, Apple, and Berkshire Hathaway (B shares). The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool recommends Costco Wholesale. The Motley Fool has a disclosure policy.
