Warren Buffett is one of the best investors the world has ever seen. From 1965 through 2024, a $100 investment in Berkshire Hathaway would have turned into $5.5 million.
If you’re looking to invest some extra cash right now, Berkshire’s $263 billion stock portfolio is a great starting point. Apple (NASDAQ: AAPL) and American Express (NYSE: AXP) were two of Berkshire’s largest investments at the end of 2024. You can buy one share of both stocks for just over $500 at the time of writing. These companies have powerful brands that could serve as a solid anchor for a well diversified portfolio.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »
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1. Apple
Berkshire Hathaway held 300 million shares of Apple worth $75 billion at the end of 2024. Since Berkshire first started buying the stock in 2016, Apple has had a great run. Its installed base of active devices has grown to over 2.3 billion and is still growing.
Buffett invests in companies that have strong competitive advantages. In Apple’s case, that starts with its brand and the attachment people have to their phones. As CEO Tim Cook said on Apple’s fiscal Q2 earnings call, “Apple services are enriching our users’ lives all throughout their day.”
The iPhone generates over half of the company’s revenue. People carry their phones wherever they go, and that just keeps the cash pouring in for Apple. Revenue from services, including Apple Pay, generates twice the gross profit margin as sales of devices, and it’s Apple’s fastest-growing segment, with revenue up 12% year-over-year last quarter.
Apple could benefit enormously from artificial intelligence (AI). The rollout of Apple Intelligence conveniently puts a generative AI-powered device within easy reach. Apple is investing to deeply integrate AI across its devices, which could drive more iPhone sales over time.
Another important reason Buffett likes Apple is its profitability. Over the last year, Apple generated $97 billion in net income on $400 billion of revenue. This provides ample resources to reward shareholders. For example, it returned $29 billion to shareholders through dividends and share repurchases in the last quarter alone.
Apple is truly the gift that keeps on giving. Analysts currently expect the company’s earnings per share to grow at an annualized rate of 11% over the long term, which should fuel higher share prices.
2. American Express
Buffett’s history with American Express goes back 60 years, when he first bought the stock at an opportunistic value for Buffett Partnership. He later bought shares (at a much higher price) for Berkshire Hathaway in the 1990s. At the end of 2024, Berkshire still held over 151 million shares of American Express, worth $45 billion at the time.
American Express has a very strong brand that has proven resilient in the face of economic uncertainty. Total card spending grew 6% year-over-year last quarter, driven by healthy spending on goods and services. This solid growth in card spending can translate to double-digit growth in the company’s earnings per share.
The company sees plenty of growth opportunities, including the addition of 3.4 million new cards in the quarter. Importantly, 60% of new customer accounts acquired globally were driven by millennials and Gen Z consumers. American Express is clearly an aspirational brand for younger generations, which improves its long-term growth prospects.
The longer card members use their American Express card, the more likely they are to upgrade to premium cards that charge higher annual fees. Revenue from card fees grew 18% year-over-year last quarter, representing a lucrative revenue source for the company. The fees on premium cards naturally attract high-spending consumers. The average American Express card member has a high income and excellent credit profile. This bolsters the resiliency of the business through economic cycles.
Buffett discovered the timeless characteristics of the American Express brand decades ago. It appears to be a forever stock for this legendary investor, and it should continue to grow in value. Analysts expect earnings to grow at an annualized rate of nearly 14% over the next several years.
Should you invest $1,000 in Apple right now?
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American Express is an advertising partner of Motley Fool Money. John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple and Berkshire Hathaway. The Motley Fool has a disclosure policy.