Every investor knows the investing legend Warren Buffett and hopes to ape the kind of portfolio and returns that the Oracle of Omaha has generated over the years. Today we will look at five stocks from Buffett’s top 10 investments that can offer decent upside potential in the next twelve months.
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Buffett invests in companies through his conglomerate Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B). Berkshire’s portfolio is made available publicly every quarter through the 13-F regulatory filings. Ace hedge fund manager Buffett’s portfolio has generated average returns of 17.71% in the last twelve months and has a Sharpe ratio of 1.39. A majority of Berkshire’s investments are in the Technology sector since Buffett believes in the potential of growth stocks that are backed by innovation.
#1 Apple Inc. (NASDAQ:AAPL)
Apple is the most loved stock by Buffett and has taken the number 1 spot in his portfolio for years. Buffett first started buying Apple in 2016, and as of 2023 end, Berkshire had 905.56 million of AAPL shares worth $155 billion. Berkshire owns 5.9% of Apple and the tech giant comprised 42.4% of Berkshire’s portfolio as of the end of 2023.
The iPhone maker has not been as innovative in recent years as it has been in the past with its smartphones, tablets, and laptops. Yet, Apple’s core value lies in the unending demand for its products, which command a premium position in key markets. Apple’s most awaited Vision Pro headset is expected to disrupt the virtual reality market. Having said that, Apple is facing certain challenges as demand from its biggest market, China, is deteriorating and ongoing litigations continue to haunt the tech giant.
What is the Analyst Estimate for Apple?
On TipRanks, AAPL stock has a Moderate Buy consensus rating based on 16 Buys, nine Holds, and one Sell rating. The average Apple Inc. share price forecast of $204.86 implies 19.7% upside potential from current levels.
#2 Chevron (NYSE:CVX)
The American energy giant Chevron holds the fifth largest position in Berkshire’s portfolio at 5.3%. Berkshire has 126.09 shares of CVX worth $19.40 billion as of December 31, 2023. In effect, BRK has a 6.8% stake in Chevron. The oil and gas major is a known dividend aristocrat, paying out handsome dividends and increasing them consistently for the last 36 years.
Chevron’s most recent quarterly dividend of $1.63 per share was paid on March 11, reflecting a yield of 4.05%. Chevron is involved in every aspect of oil and gas production, refining, and retailing and is the second largest player in the U.S. No wonder that Buffett has his hands on this stock, one of the important players in the vital global energy industry.
Is Chevron a Good Stock to Buy Now?
With ten Buys versus six Hold ratings, CVX stock has a Moderate Buy consensus rating on TipRanks. The average Chevron share price target of $176.63 implies 14.8% upside potential from current levels. CVX stock has lost 4.3% in the past year.
#3 Kraft Heinz (NASDAQ:KHC)
Kraft Heinz is one of the largest consumer packaged food and beverage companies. KHC takes the seventh spot (3.1%) in Berkshire’s portfolio, with 325.63 million shares worth $11.24 billion. Berkshire has a massive 26.8% stake in Kraft Heinz.
KHC is one of the few stocks that Buffett has acknowledged as an overpriced investment. Although the investment has not yielded as much as Buffett would have expected post the Kraft Foods and H.J. Heinz merger in 2015, which he was actively involved in, KHC does pay lucrative dividends.
Kraft Heinz is slated to pay its next quarterly dividend of $0.4 per share on March 29. KHC boasts a dividend yield of 4.57%, much higher than the sector average.
Is Kraft Heinz a Buy, Sell, or Hold?
Analysts remain split about KHC stock’s trajectory. With five Buys, eight Holds, and one Sell rating, KHC stock has a Moderate Buy consensus rating on TipRanks. The average Kraft Heinz share price forecast of $38.21 implies 10.7% upside potential from current levels. KHC shares have lost 9.5% in the past year.
#4 Coca-Cola (NYSE:KO)
Coca-Cola is the unbeaten hero of the non-alcoholic beverage market. The company is also a Dividend King, which explains why Buffett has built a position in the stock. Coca-Cola is the fourth-largest investment in Berkshire’s portfolio (6.7%). Buffett has accumulated 400 million KO shares since 1988, accounting for 9.3% stake in Coca-Cola, and as of December 31, its value stood at $24.45 billion.
Being a consumer staple company, Coca-Cola survived the pandemic and the inflationary environment easily. The demand for its drinks and snacks has been consistently growing. Buffett has claimed earlier that he would never sell any of KO stock. Coca-Cola enjoys a wide moat with stable cash flows and has continuously awarded shareholders via buybacks and dividends.
Coca-Cola has raised its dividend for 62 consecutive years. Its current quarterly dividend of $0.48 per share is payable on April 1. The dividend reflects a yield of 3.05%, better than the industry average.
What is the Price Target for KO?
Despite the positive attributes, KO stock has a Moderate Buy consensus rating on TipRanks. This is based on 11 Buys versus four Hold ratings. The average Coca-Cola share price target of $66.20 implies 8.3% upside potential from current levels.
#5 Occidental Petroleum (NYSE:OXY)
America’s oil and gas behemoth Occidental Petroleum has been one of Buffett’s key picks. Buffett started accumulating OXY stock in 2019 and has since amassed a 28.2% stake in the company. Berkshire owns 248.02 shares of OXY worth $15.39 billion as of 2023 end. Occidental has steadily climbed up the ranks on Berkshire’s portfolio and currently occupies the sixth position.
Occidental is a leader in hydrocarbon exploration in the U.S. and is also venturing into carbon-capture technology. While not yet a dividend aristocrat, OXY pays a dividend of $0.22 per share, reflecting a yield of 1.17%.
What is OXY Price Target?
The average Occidental Petroleum share price target of $67.86 implies 9.4% upside potential from current levels. Also, OXY stock has a Moderate Buy consensus rating on TipRanks based on seven Buys versus eight Hold ratings. OXY shares have gained 3.1% in the past year.
Key Thoughts
Warren Buffett has a proven record of generating attractive returns on his long-term stock picks. Investors can refer to his buy/sell pattern to understand which stocks are the probable winners in the long run. The above five stocks are Buffett’s favorites and also pose attractive upside potential in the next twelve months.
