Legendary investor Warren Buffett owns a plethora of fantastic companies through Berkshire Hathaway. And two that stand out are Coca-Cola (NYSE:KO) and Apple (NASDAQ:AAPL).
Why? Because Buffett’s never sold a single share of Coke since he first invested in the 1980s. Meanwhile, Apple is Berkshire’s single largest holding at 23.7% of the entire investment portfolio. In fact, between the two stocks, Buffett has almost $100bn invested!
So if the world’s most successful investor has such a large amount of money within these two businesses, should other long-term investors consider them as well?
Is Coca-Cola still a good investment?
While a beverages business isn’t the most exciting enterprise, in 1988 the billionaire spotted what most investors were overlooking – a powerful competitive moat protected by an iconic brand driving substantial pricing power.
That’s translated into over 60 years of consecutive dividend hikes. So can this steady compounder continue to deliver similar results in the future?
Even during economic downturns, Coca-Cola has proven to be quite resilient, with consumers still happy to pay up thanks to brand loyalty. And with management using its excessive cash generation to invest in product innovation, the business has been quite skilled at adapting to shifting consumer preferences.
But with Coca-Cola now penetrated into almost every market in the world, is there really much more room for growth?
That’s a question many institutional analysts seem to have about this business. And this concern is only being compounded by the slow but steady decline in soda consumption in developed markets as consumers become increasingly more health-conscious.
What about Apple?
Apple’s another interesting stock pick from Buffett and his team. Rather than viewing Apple as a tech stock, Buffett saw it as a consumer products powerhouse with an ecosystem that locks in users.
Considering Apple shares have climbed over 1,000% since the start of 2016, I think it’s fair to say Buffett was once again spot on. But, like Coca-Cola, is there really much more room for growth?
While Apple’s certainly not delivering massive sales surges in its latest results, it’s hard to ignore the enormous success of its new iPhone 17 launch in September.
Demand for the new device has been significantly higher than what most analysts were expecting. And a total of 247 million devices are expected to be shipped in 2025, compared to the previous record of 236 million in 2021 for the iPhone 16.
The result? Record revenue and profits.
The bottom line
Both businesses enjoy deep global market penetration. But out of the two, Apple seems like it still has a long way to climb.
iPhone sales are ultimately just one part of the equation for this business. Services are the other. And by upselling services to its device users, there remains plenty of untapped value left to explore – an opportunity Coca-Cola doesn’t have.
This growth potential doesn’t come risk-free. The business is already having to navigate the challenges that US tariffs have created. And as one of the largest companies in the world, Apple’s frequently finding itself in the crosshairs of regulators.
However, given the quality of this business, those might be risks worth taking. That’s why I think it’s wise to dig deeper into this Buffett stock.
