Warren Buffett’s 3 Must-Hold Stocks for Long-Term Investors

Stocks to buy

At age 92, Warren Buffett’s stock picks have stood the test of time. The Oracle of Omaha has put up some of the most incredible numbers of any long-term investor over his storied career. His long-standing experience in investing and the resilience of his Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B) holdings can provide a stable portfolio that endures market fluctuations, rather than chasing fads that might falter in bear markets.

Buffett favors companies that enhance shareholder value via dividends and share repurchases, many of which are included in this list. The focus, however, is on stocks with a forward price-earnings ratio below the S&P 500 average. This suggests a potential for price-multiple expansion as other stocks depreciate. 

Let’s delve into three of Warren Buffett’s favorite stocks to buy and hold for long-term investors.

Apple (AAPL)

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Apple’s (NASDAQ:AAPL) forward price-earnings ratio, at around 28-times, is higher than the S&P 500 average of roughly 20-times. Accordingly, it’s somewhat of an anomaly, from that perspective.

And so, this mega-cap tech giant continually demonstrates innovation and excellence. Its unmatched product range, fueled by worldwide iPhone fascination, maintains its market leadership amidst intense competition. The brand’s capacity to demand high prices reflects its market supremacy, ensuring steady cash influx each quarter.

Despite rising costs pushing customers towards cheaper alternatives, Apple’s production indicates a hopeful reception for the upcoming iPhone 15. The consistent demand for their hardware sets the stage for the success of their Services sector, which is cost-efficient due to its digital nature, offering enticing profit margins. 

This potential growth makes Apple attractive to investors, even in challenging circumstances. As conditions improve, Apple’s position for significant growth, especially within its services sector, strengthens.

Bank of America (BAC)

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Bank of America (NYSE:BAC), the second-largest bank stock in the U.S. offers appealing valuation metrics. These measurements have improved, given a 13% drop in the company’s equity value this year and an 18% decline over the past year. 

Despite global banking uncertainties, Warren Buffett continues to support Bank of America, holding a 13% stake worth over $32 billion. His endorsement and the retention of his shares, despite selling off other bank stocks, demonstrate his confidence in the bank’s strength and market position. 

This decision mirrors his 2011 action when he bolstered the bank with a $5 billion investment during a debt crisis, further proving his trust in Bank of America’s resilience.

Occidental Petroleum (OXY)

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Buffett continues to increase his stake in Occidental Petroleum (NYSE:OXY). The Oracle owns 25% stake in the company. He is optimistic about the oil company’s future, including its shift towards sustainable energy. This investment could also yield short-term benefits amidst volatile oil markets and production disputes among major oil-producing nations.

Occidental Petroleum’s stock has seen a year-to-date increase of 4.95%. Analysts have given 36 “buy” ratings since May, with an average 12-month price target of $66.50. The oil and gas sector, valued at $7.33 trillion in 2023, is expected to grow by over 6% CAGR by 2030. With predictions of increased oil demand and rising prices due to falling interest rates, Occidental emerges as a top choice among oil stocks to purchase.

Contrary to some beliefs, Warren Buffett’s investment in Occidental Petroleum isn’t a rejection of renewables over fossil fuels. This investment isn’t just short-term profitable for Buffett. Rather, it represents a long-term bet on renewable energy, understanding that oil companies will play a role in alternative energy.

On the date of publication, Chris MacDonald has a LONG position in BRK-B, AAPl. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.

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