If you owned a $1,000 stake in Berkshire Hathaway when Warren Buffett became the company's CEO more than a half-century ago and held on to your position, you would now own stock worth roughly $22.6 million. While matching that kind of incredible performance over the next 50-plus years is likely out of reach due to the investment conglomerate's already massive size, the company's performance under Buffett's tenure should make it clear why the famous investor is sometimes referred to as the Oracle of Omaha.
Berkshire Hathaway's investment portfolio continues to reflect Buffett's focus on high-quality companies that are built to perform over the long term, and it's little wonder that investors around the world continue to look to him for guidance on market-beating stock plays. Read on for a look at two top Buffett-backed companies that are worth adding to your portfolio right now.
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Based on figures from the company's most recent 13F filing, Apple (NASDAQ: AAPL) makes up somewhere in the neighborhood of 40% of Berkshire Hathaway's total stock holdings. The company's position in Apple is worth nearly twice as much as its combined holdings in Bank of America and American Express, its second and third-largest stock holdings, respectively. That's an incredible vote of confidence from one of history's greatest investors, especially because the Oracle of Omaha has traditionally been somewhat averse to technology stocks.
Apple's business is becoming increasingly complex and bears some of the tech sector hallmarks that have deterred Buffett and Berkshire from making some big investments in the broader sector. But the company also possesses many of the qualities that Buffett prizes in a business. Crucially, Apple has a strong moat and is by far the most powerful brand in the mobile computing space, and it looks positioned to keep racking up wins.
In addition to crushing the competition when it comes to profitability on smartphone and tablet sales, Apple is also gaining a substantial market share in the global mobile market. And, don't forget the company's burgeoning services segment. For the third quarter ending June 26, Apple reported revenue of $81.4 billion, up 36% year over year. Overall, the company raked in $21.7 billion in net income which was nearly double the amount generated in the prior year.
Apple has used the strength of its mobile hardware ecosystem to build category-leading software and services businesses. And the value of its customer base is unmatched in the mobile software space. People who use the company's iOS mobile operating system spend far more on average than users with mobile devices powered by Alphabet's Android operating system. It's likely that Apple will be able to continue leveraging this strength to drive sales and earnings growth for its App Store and subscription services.
For another example of the synergistic advantages created by the company's hardware and software ecosystem, consider the benefits being created by its recent user privacy and digital advertising changes. Branch, a mobile advertising tracker, recently reported that Apple has managed to triple its market share in ad-driven app downloads just six months after making the shift.
The company has already experienced stock growth of 172% over the past three years and nearly 1,000% for the past 10 years. But Apple is a business that's built to win the future, and the stock continues to offer market-beating upside with a non-prohibitive risk profile.
It's no secret that Buffett loves a great value stock, and Verizon (NYSE: VZ) fits the bill. The company currently stands as Berkshire's seventh-largest stock holding, and it offers an attractive returned-income component supported by a sturdy business.
The telecommunications giant pays a dividend, yielding roughly 4.8%. Verizon has increased its payout annually for 15 years running, and looks cheaply valued at current prices. With the company's share price down roughly 3% year to date, Verizon now trades at less than 10 times this year's expected earnings, and the pullback has taken place despite relatively strong sales and earnings performance across the stretch.
The company delivered top- and bottom-line beats when it reported second-quarter results in July, and it's delivered another significant earnings beat with its recent third-quarter report. For Q3 2021, Verizon reported revenue of $33 billion and a net income of $6.6 billion which was up 45% over last year. The company's sales for the period did fall short of the average analyst estimate, but the miss doesn't look concerning when viewed in the context of factors suggesting stronger sales performance down the line.
The telecom giant added 699,000 net post-paid wireless subscriptions in the quarter, coming in significantly ahead of the average analyst estimate's call for 566,000 new subscriptions in the quarter. With strong wireless momentum at its back, Verizon has once again raised its full-year earnings target. The company now expects to post non-GAAP (adjusted) earnings per share between $5.35 and $5.40 this year, up from its previous guidance for per-share earnings between $5.25 and $5.35.
Verizon has a great business and still appears to be in the early stages of benefiting from the 5G transition. With shares sporting a big dividend and trading at low earnings multiples, the stock looks like a great buy right now.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Bank of America is an advertising partner of The Ascent, a Motley Fool company. American Express is an advertising partner of The Ascent, a Motley Fool company. Keith Noonan has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Apple, and Berkshire Hathaway (B shares). The Motley Fool recommends Verizon Communications and recommends the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), long March 2023 $120 calls on Apple, short January 2023 $200 puts on Berkshire Hathaway (B shares), short January 2023 $265 calls on Berkshire Hathaway (B shares), and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.