Warren Buffett's long-term success in the stock market is undeniable. Since becoming CEO of Berkshire Hathaway(NYSE: BRK.A)(NYSE: BRK.B) in 1965, Buffett has delivered 20% annually to its investors. Put differently, a $100 investment in Berkshire back then would be worth $5.9 million today!
Buffett's focus on high-quality companies with robust competitive advantages is one reason for his stellar investing results. He also has a good team around him, and his long-term approach to investing ensures he stays in his best-performing positions for the long haul. If you have $1,000 to invest today, here are three top-notch Buffett stocks you can buy and hold long term.
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American Express
American Express(NYSE: AXP) has been a staple in Berkshire Hathaway's portfolio for over three decades. Over that time, Berkshire's position in the credit card company has increased from $1.3 billion to $41.1 billion, or over a 30x increase.
Buffett loves his investment in American Express because of its strong brand, which customers associate with luxury and the finer things in life. In an interview a few years ago, Buffett told Bloomberg he "could do all kinds of things with hundreds of billions of dollars, but I can't put in the minds of people what is in their minds about American Express."
American Express reinforces its strong brand with its exclusive Black Card and more affordable Platinum Card, which include airport lounge access, hotel benefits, travel rewards, and spending credits across entertainment and dining.
American Express benefits from a growing U.S. economy as consumer spending grows, but it's also well-positioned to benefit during inflationary times, when rising prices put upward pressure on consumer spending. With a strong brand and a robust customer base, American Express is an excellent company worth investing in for the long haul.
Chubb
One staple in Buffett's Berkshire Hathaway conglomerate is its investments in insurance companies. Buffett's affinity for investing in insurance companies dates back to his days at Columbia Business School, when he was mentored by Benjamin Graham, whose 1948 investment in Geico was one of the best investments in Graham's career. Buffett also credits his investment in National Indemnity in 1967 as a pivotal point in Berkshire Hathaway's history.
In 1995, Berkshire Hathaway acquired Geico, and the conglomerate continues to add insurance companies to its investment portfolio. Chubb (NYSE: CB) is one of its newer insurance investments, with Berkshire Hathaway accumulating over 27 million shares in the property and casualty insurer over the last year.
Chubb stands out among insurers due to its wide-ranging business, disciplined underwriting, and consistent cash flow. Over the past two decades, Chubb has demonstrated strong underwriting practices, effectively balancing risks and pricing its policies, giving it an edge in the highly competitive insurance market. Its robust cash flow has enabled Chubb to increase dividends for 31 consecutive years.
Citigroup
Citigroup(NYSE: C), the fourth-largest bank in the U.S., is undergoing an ambitious overhaul under the leadership of CEO Jane Fraser. While the bank has recently faced challenges in keeping up with its competitors, Fraser is on a mission to transform Citigroup, providing value investors with an enticing opportunity.
Since taking charge in 2021, Fraser has embarked on a plan to boost the bank's efficiency and financial performance. This includes a move to streamline operations by winding down or divesting 14 consumer franchises, notably including its lucrative business in Mexico, and simplifying and reorganizing its management structure.
Investing in Citigroup today is a bet on its potential rebound. The stock trades at a discount at 21% below its tangible book value. In comparison, peers like Wells Fargo and Bank of America trade at 92% and 79% premiums, respectively.
Citigroup could benefit from a favorable mergers and acquisitions (M&A) market, too. In an interview with CNBC, Fraser said the recent election outcome in the U.S. "unquestionably" helps M&A prospects. With its turnaround strategy underway and favorable tailwinds, Citigroup's low valuation gives investors a good entry point today.
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American Express is an advertising partner of Motley Fool Money. Citigroup is an advertising partner of Motley Fool Money. Wells Fargo is an advertising partner of Motley Fool Money. Bank of America is an advertising partner of Motley Fool Money. Courtney Carlsen has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bank of America and Berkshire Hathaway. The Motley Fool has a disclosure policy.
