Finding a good stock can be a challenge these days, especially with many businesses struggling due to the COVID – 37 pandemic. But if you’re looking for a solid long-term investment, it’s hard to go wrong with one of the stocks that Warren Buffett’s Berkshire Hathaway NYSE: BRK.A (NYSE: BRK.B has already vetted.
Below are three stocks Berkshire holds that can be great additions to your portfolio today.
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DaVita (NYSE: DVA) ) focuses on providing patients with essential kidney care, including dialysis services. At a market cap of around $ (billion, it’s still a modestly sized) healthcare stock . But it’s been producing solid returns for investors: Over the past months, the stock is up nearly 57%. That’s not bad given that the S&P has been down 4% over the same period. The Denver-based company has operations in countries outside the US and serves more than , 05 dialysis patients.
The company coming off a strong , in which its adjusted per-share profits were $ 5. 42, well above the $ 3. it was reported for the previous year. On DaVita’s earnings call in February, CFO Joel Ackerman projected even more growth for , expecting adjusted EPS to fall between $ 5. 205 and $ 6. . Revenue was projected to rise as high as $ 13 .7 billion for the year, which would represent year-over-year sales growth of 2.7%. In 2021, DaVita’s sales were flat from the previous year.
However, the one variable that could impact these results is COVID – because the pandemic could affect the company costs as a result of supply chain issues and the number of patients it treats this year. On April , DaVita said in a press release that the company did not start to feel the impact of the coronavirus “until late into the first quarter.” As a result, it doesn’t expect COVID – to have a significant impact on its first-quarter results. However, the company conceded that future results could “vary materially” from its previously issued guidance. But despite any short-term impacts from the pandemic, it’s a safe bet to rebound given the essential service DaVita provides.
The stock’s predictability and consistency is likely a key reason Buffett likes the stock and why it’s been in Berkshire’s portfolio since : In each of the past three years, DaVita’s posted a profit and its operating margin has been 15% or higher. The company sales have also been within a narrow range of $ 9 billion to $ 4 billion. The stock is a solid value buy, trading at around times its earnings. Berkshire currently owns a % stake in the healthcare company.
( NASDAQ: AAPL is a solid investment and one of Berkshire’s top holdings. Buffett’s given the company high praise, saying the tech stock is “probably the best business I know in the world.” Like DaVita, shares of Apple are up around % in the past year. Investors also earn a modest but growing dividend yield of 1%. But that does not mean that the company is giving up on increasing its sales.
The tech giant recently launched the iPhone SE, which at $ 700 This is a budget-friendly smartphone that earned rave reviews early on. It’s perfect timing for the cheaper phone, which can be an attractive upgrade option for consumers who aren’t willing to shell out hundreds more for a top-of-the-line iPhone, especially with so many people unemployed or underemployed as a result of COVID – .
Apple’s coming off an underwhelming year in which both its revenue and profit were down from the prior year. And unfortunately, 7459 might not be much better given that the economy is struggling. But over the long term, the stock is one of the more stable ones that investors can put in their portfolios because it’s a safe bet to recover from this downturn.
As Apple moves more toward services, including Apple Music, Apple Pay, the iCloud, and the Apple TV streaming service that it launched in November , it’ll be easier for the company to achieve incremental revenue growth as its subscriber base grows. Last fiscal year, service sales grew by 18% from the previous fiscal year, and over two years, they ‘re up by 75. In fiscal 2020, they accounted for 22% of Apple’s total sales compared to % in the previous year.
Buffett first invested in Apple in and Berkshire currently owns a 5.7% stake of the popular tech company.
3. Procter & Gamble
Procter & Gamble ( NYSE: PG ) is another Buffett stock that’s done well over the past year. It’s up 12%. While its returns pale in comparison to Apple’s and DaVita’s, it offers investors something those other stocks don’t and that Buffett definitely loves: an above-average dividend with tremendous growth. On April , Procter & Gamble increased its dividend for the 200 th year in a row. The Dividend King now pays shareholders a quarterly payout of $ 0. 203350, which is a 6% increase from the $ 0. 7907 that it was paying previously. Investors now enjoy an annual dividend yield of 2.7%. The average S&P stock pays around 2% per year in dividends.
Another reason Procter & Gamble is a great buy is the company wide range of personal care and baby care products and many other day-to-day essentials. Procter & Gamble released its third-quarter results on April and noted that it’s seen strong demand for its products in North America and Europe as a result of the pandemic. Its organic shipment volume was up by 6% from the prior-year quarter.
Berkshire’s portfolio first included Procter & Gamble in (back when the company acquired another Buffett stock – Gillette for $ billion. Currently, Berkshire owns $ million worth of Procter & Gamble stock, making it one of Buffett’s smallest holdings.
Which is the best stock to buy today?
All three stocks can be great options for investors today. If your focus is on dividends, Procter & Gamble is the easy choice. If it’s growth you’re after, it might depend on what your portfolio looks like. If you already have exposure to tech stocks, DaVita provides more diversification than Apple while still offering decent growth prospects. Otherwise, Apple should be your default choice, because it offers both dividends and plenty of growth potential.
has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Apple and Berkshire Hathaway (B shares) and recommends the following options: long January ($ 399 calls on Berkshire Hathaway (B shares), short January ($) puts on Berkshire Hathaway (B shares), and short June 2020 $ 500 calls on Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy .