3 Warren Buffett stocks to buy for a Stocks and Shares ISA

Edward Sheldon has been taking a look at Warren Buffett’s portfolio. Here are three Buffett-owned stocks he’d buy for his Stocks and Shares ISA today.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Warren Buffett is generally regarded as the greatest stock market investor of all time. So I tend to keep an eye on his investment portfolio.

Recently, I was looking through his portfolio for investment ideas. With that in mind, here’s a look at three Buffett stocks I’d be happy to buy for my Stocks and Shares ISA today.

Apple

Let’s start with Apple (NASDAQ: AAPL). This is Buffett’s largest holding.

Apple’s results for the year ended 30 September 2021, posted last week, showed that the company continues to grow at a healthy rate. For the year, total net sales came in at $365.8m, up from $274.5m a year earlier. To my mind, that’s a very impressive level of growth given the company’s size ($2.5trn).

Looking ahead, I see potential for further growth here. In the near term, many consumers are likely to upgrade their iPhones to 5G handsets. Meanwhile, in the long run, the company should benefit from its move into high-growth industries such as healthcare and payments.

There are risks here, of course. One is the fact that regulators are looking closely at App Store profits. Future regulatory action could slow growth.

All things considered, however, I think the stock has a lot of appeal right now. The forward-looking P/E ratio is about 26, which is a bargain, to my mind.

Mastercard

Another Buffett stock I like the look of right now is Mastercard (NYSE: MA). It’s one of the world’s largest payments companies.

Mastercard was significantly impacted by the coronavirus due to the fact a large chunk of its revenue comes from ‘cross-border’ transactions (that is, travel spending). With no one travelling last year, revenues took a big hit.

However, with travel now picking up, revenues are rising. In the third quarter of 2021, for example, net revenue came in at $5bn, up 32% year-on-year. Looking ahead, I think revenues are likely to keep rising. That’s because the world is rapidly moving away from cash and shifting towards electronic payments.

A risk it faces is competition. The financial technology industry is highly competitive and Mastercard faces competition from a wide range of companies including Visa, PayPal, and Affirm.

I’m backing the company to win in the long run, however. And with the stock trading at around 30 times next year’s earnings, I’m a buyer.

Amazon

Finally, I’d also buy Amazon (NASDAQ: AMZN) for my Stocks and Shares ISA.

Amazon shares have pulled back a little since the company posted its Q3 results last week. This is due to the fact that earnings were down ($6.12 per share versus $12.37 in Q3 2020) due to higher costs.

I’m not particularly concerned by this earnings weakness, however. Total net sales were up 15% to $110.8bn for the period which is pretty impressive for a company worth $1.7trn. Meanwhile, revenue in the company’s cloud computing division (which I see as the real growth driver here) was up 39% to $16.1bn. These figures lead me to believe that the long-term growth story is still intact.

It’s worth noting that Amazon has a high valuation. Currently, the stock has a forward-looking P/E ratio of about 53. This adds risk to the investment case.

I’m comfortable with this valuation, however. This company is an absolute powerhouse and I expect it to get a lot bigger in the years ahead.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be considered so you should consider taking independent financial advice.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Edward Sheldon owns shares of Amazon, Apple, Mastercard, PayPal Holdings, and Visa. The Motley Fool UK has recommended Amazon, Apple, Mastercard, and PayPal Holdings. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Bearded man writing on notepad in front of computer
Investing Articles

Is there still time to buy Scottish Mortgage shares?

The Scottish Mortgage share price has risen strongly in recent weeks. Should I pile into the FTSE 100 momentum stock…

Read more »

Smiling white woman holding iPhone with Airpods in ear
Investing Articles

Why I’d start buying shares with £250 today not £20,000 in future!

Is it worth waiting to start buying shares until one has more money to invest? Our writer doesn't think so…

Read more »

Playful senior couple in aprons dancing and smiling while preparing healthy dinner at home
Investing Articles

I’ve bought Diageo shares to boost my long-term passive income!

I plan to hold on to my Diageo shares well into retirement. Here's why I think it's a top stock…

Read more »

New virtual money concept, Gold Bitcoins
Investing Articles

Down 61%, are Argo Blockchain shares worth buying?

Argo Blockchain shares have tumbled in value. As a shareholder, Christopher Ruane considers what might come next for the business…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

3 UK dividend stocks with yields over 10%

These dividend stocks are the highest yielders on the UK market, says Roland Head. But how safe are these generous…

Read more »

Couple relaxing on a beach in front of a sunset
Investing Articles

I’d start buying shares for passive income with this pair

Our writer is looking to earn passive income via investing, and here are two leading stocks he might buy.

Read more »

Tanker coming in to dock in calm waters and a clear sunset
Investing Articles

Here’s the Shell dividend forecast through to 2024

The Shell dividend is still nearly 50% below 2019 levels. Will the oil giant use record profits to rebuild its…

Read more »

Warren Buffett at a Berkshire Hathaway AGM
Investing Articles

3 FTSE 100 stocks I think Warren Buffett might love!

Warren Buffett made his fortune thanks to the success of US shares. But here are three FTSE 100 stocks I…

Read more »