7 Stocks Warren Buffett Loves — And You Should, Too

By Christa Avampato on 13 April 2015 1 comment

Warren Buffett is one of the most successful investors of all time. He's also famous for living modestly (he still occupies a very middle class home in Omaha and drives an older vehicle) and investing in products that can be easily understood by anyone. (That's enough to make any Wise Bread reader swoon.) Here are seven of the stocks he loves that we should all seriously consider for our portfolios:

1. Wells Fargo

Mr. Buffett devotes almost a quarter of his stock portfolio to Wells Fargo. Many financial services stocks boomeranged during the recession. In this instance, Wells Fargo's diversification helped cushion them from the losses and rock bottom stock prices that many of their competitors experienced during the depths of the financial crisis. Its motto could be simply stated as "steady as it goes." And if there's anything that Mr. Buffett likes, it's stability.

2. Coca-Cola

Coca-Cola is synonymous with Americana. I still remember the iconic commercials from my childhood, and its polar bears remain a staple of Christmas advertising. All of the nostalgia aside, the world's most famous beverage (and brand) has held its value. For almost 40 years, it's steadily climbed its way up in price from $0.81 per share in 1978 to almost $41 per share in 2015.

3. American Express

American Express zeroes in on wealthier customers who tend to experience less strife during a difficult economy. Though Amex experienced a significant decline in its stock price during the most recent recession, it has since bounced back nicely. Since its low of $10 in 2009, the stock has clawed its way back to almost $80 per share, significantly higher than its share price prior to the recession.

4. IBM

IBM is a bit of a roller coaster stock if we focus on any short-term timeframe. However, if we zoom out and take a look at its performance over the long-haul, we see that the highs outweigh the lows. Mr. Buffett is famous for taking the long view, and IBM is a great example of the value of this perspective. Since the doldrums of 2009, IBM has doubled its per share price.

5. Wal-Mart

There's plenty of criticism in the press when it comes to Wal-Mart's business practices. Many take umbrage with its employee practices and environmental policies. But when it comes to making an investment in a company that provides returns, Wal-Mart is another stock that consistently delivers for its shareholders. Even during the latest recession when many other companies were bottoming out, Wal-Mart held its value. In the past 20 years, its stock price has grown more than seven times over.

6. Procter & Gamble

Open up your medicine cabinet or look under your sink, and chances are you've got at least one Procter & Gamble product that's a staple in your daily life. Mr. Buffett loves companies like this because they are such a part of the fabric of American consumer's habits. P&G is an innovation leader with a careful and thoughtful eye toward improving the lives of its customers through its products. This commitment shows in its stock price, which has grown by over 28% in the past five years.

7. U.S. Bancorp

Like many of Mr. Buffett's other stock picks, U.S. Bancorp has been on an upward climb since the depths of the latest recession. Though it hasn't seen a dramatic rise in price like American Express and Wal-Mart, it's nonetheless a solid bet thanks to its business spanning the full range of financial services from retail banking, to capital markets, to investment management.

In Mr. Buffett's portfolio we immediately notice one obvious pattern — he invests in brands that are well-known and ubiquitous to American life. In the days of flashy startups, over-the-top IPOs, and Silicon Valley's flashes in the pan, Mr. Buffett provides us with a salient counter example for the prudent investor: invest in what you know and in what everyone else knows, too.

Do you own any of Warren Buffett's favorite stocks? If so, which ones and why?

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Guest's picture
Pablo

Be careful with those names. Many of those businesses' fundamentals have deteriorated significantly since Buffet first invested in them. For most investors (if not all), investing in index funds has proven to be a better strategy than individual stock picking.