The tale of legendary investor Warren Buffett needs no introduction. Starting with just a small sum, the ‘Oracle of Omaha’ has amassed a fortune of over $100bn in his eight decades of stock market investing.
During his time as Berkshire Hathaway CEO, he’s generated an average annual return of around 20% for shareholders, double that of the S&P 500.
With his conglomerate experiencing this success, I think it’s time I tried to steal some of Buffett’s wisdom in an attempt to replicate it for my own portfolio.
With that, here are two Berkshire holdings I’d buy today if I had the cash.
First up is Apple (NASDAQ:AAPL). The business has become one of the best-known brands on the planet.
So it’s no surprise that Buffett labels it as one of his best investments, being the backbone of Berkshire’s equity portfolio.
Key to Buffett’s investing strategy is to buy companies you know and understand. And this certainly resonates with Apple.
With over one billion people using its products, it’s easy to see the value of the business.
While far from monumental in size, Apple stock also provides investors with a dividend yield of around 0.5%. For Buffett and his 915m shares, this equated to a payout of nearly $900m last year!
On top of this, the firm has put greater emphasis on creating more value for shareholders. As flagged in its latest results, Q3 saw it return over $24bn to investors.
I also like the moves the business is taking away from its core products. Q3 saw its Services sector report record revenue, including over 1bn paid subscriptions. Earlier this year, Apple also announced the launch of its VR headset, priced at $3,499.
The largest threat to Apple is clearly inflation. As well as rising costs, racing inflation could deter consumers from splashing out on its products and services.
Yet with its market grip and renowned brand recognition, I think Apple is a smart long-term play.
Bank of America
The second stock is Bank of America (NYSE:BAC). There’s been quite a bit of uncertainty across the financial sector this year. And events such as the collapse of Silicon Valley Bank have spooked investors.
However, like Buffett, I buy for the long haul, so I see a host of opportunities within the sector right now, including Bank of America.
The stock takes up slightly less room in Berkshire’s portfolio, but there are still ample reasons to like it. Firstly, it looks cheap. As I write, it trades on a price-to-earnings ratio of below 9. Secondly, it has a dividend yield of over 3%.
On top of this, the bank also posted a strong set of Q2 results, including a 19% jump in net income and a 21% rise in its earnings per share.
Further, it’s benefited from rising interest rates, with net interest income rising 14%.
Given the current economic environment, Bank of America remains constantly under pressure. This has been seen recently as customers demand higher saving rates, in turn potentially impacting the firm’s net interest margin. The lingering threat of recession is also bad news for the bank.
However, with a low valuation and appealing yield, I deem the stock a long-term winner.