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3 Warren Buffett Stocks I’d Buy and Hold

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close-up photo of investor Warren Buffett
close-up photo of investor Warren Buffett

Written by Andrew Button at The Motley Fool Canada

Warren Buffett is an investing legend for a reason.

Averaging 20% annual returns over an astounding 55-year period, his results speak for themselves.

If you’d invested $10,000 with Warren Buffett at the start of his run, you’d be a millionaire by now. That fact is made all the more impressive by the observation that Buffett doesn’t generally invest in ultra-small caps. For the most part, his superior track record was achieved by investing in average, everyday stocks that most people already know about. With that in mind, here are three well-known Warren Buffett stocks that I would buy and hold at today’s prices.

Suncor Energy

Suncor Energy (TSX:SU)(NYSE:SU) is a stock that Warren Buffett has owned on and off over the years. Most recently, he bought it in 2020. Suncor Energy’s earnings were devastated due to the COVID-19 pandemic, which sent oil prices to stunning lows. At one point, West Texas Intermediate (WTI) oil futures went negative.

As a result, Suncor’s earnings were negative for every single 2020 quarter. But in 2021, oil prices started rising again. Driven by the economic recovery, demand began to climb. As a result, Suncor Energy managed to crank out positive earnings and strong growth in cash flow in its most recent quarter. If this trend continues, the company may be able to raise its dividend, which it had to cut because of the pandemic.

Apple

Apple (NASDAQ:AAPL) is Warren Buffett’s single largest stock holding. It’s also the biggest company in the world by market cap. Apple has a number of qualities that render it a good value:

  • A strong brand

  • High revenue per customer

  • Diversification into new businesses (e.g., Apple Music) with a built-in customer base that’s ready to buy.

AAPL is by most definitions a great stock. It has decent growth, high profit margins, and relatively sane earnings multiples. The stock is not as cheap as those that Buffett has traditionally bought, but it makes up for it in growth and profitability. Personally, I would buy this stock.

Bank of America

Bank of America (NYSE:BAC) is another major Buffett stock holding. It’s one of America’s big banks. Like Suncor Energy, it took some damage during the COVID-19 pandemic. The pandemic and requisite health measures meant many people were laid off and businesses being forced to close. As a result, BAC’s loans became riskier, and it had to increase its loan loss provisions.

But that was then and this is now. In 2021, America’s economy is re-opening, and BAC’s loans are no longer as risky as they once were. As a result, the bank’s earnings and returns on assets are on the rise. While the economy is not totally out of the woods yet, things are looking brighter than they did a year ago. This makes Bank of America one Warren Buffett stock I’d happily buy.

Do note, however, that the bank’s revenue is declining due to lower interest rates. Earnings will rise as long as PCLs keep diving lower, but if we stay in a low rate environment long term, that will hurt BAC.

The post 3 Warren Buffett Stocks I’d Buy and Hold appeared first on The Motley Fool Canada.

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Bank of America is an advertising partner of The Ascent, a Motley Fool company. Fool contributor Andrew Button has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Apple. The Motley Fool recommends the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple.

2021

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