Stocks to buy

Many people find investing in the stock market intimidating, given the sheer number of possibilities, and no assurance of return. Of course, there are plenty of money manager out there, willing to help individuals along, for a price. Warren Buffett is among the best investors of all time, providing access to a conglomerate of world-class companies with no fees attached.

Warren Buffett’s Berkshire Hathaway (NYSE:BRK-B) is a long-term equity holding vehicle, holding some of the best stocks in the world. Indeed, that Buffett has amassed a fortune by investing millions in businesses with firm foundations over time should surprise no one. His portfolio looks about as rock-solid as any fund I’ve ever seen.

Thus, even within the group of Warren Buffett stocks investors can look at, investors can still get lost regarding which companies to hold. Here are my three top picks in Berkshire’s portfolio I think are worth buying right now, for those looking to sleep easy at night.

AXP American Express $18.47
OXY Occidental Petroleum $58.18
KO Coca-Cola $60.90

American Express (AXP)

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Warren Buffett has owned an interest in American Express (NYSE:AXP) for nearly 90 years. He controls approximately 150 million shares in AXP stock, valued at around $26 billion. This investment represents around 20% of the company, and it makes Warren Buffett the largest shareholder of American Express by a wide margin.

Buffett’s fondness for American Express stems from its popular credit cards among business and leisure users. As a way to play a surging American economy over the long-term, AXP stock has turned out to be a solid proxy.

In various interviews, Buffett has repeatedly praised American Express for its resilient brand and dedicated customer base. He appreciates the company’s focus on a more affluent clientele, and has observed that American Express has maintained low levels of bad loans during economic downturns.

Buffett clearly likes what he sees in terms of the company’s fundamentals. While earnings per share declined to $2.09 this past quarter, revenues grew by 17% on a year-over-year basis. Thus, American Express’ clientele appears to be on good footing right now. For Buffett and all investors, that’s a good thing.

Occidental Petroleum (OXY)

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According to recent regulatory filings in March, Berkshire Hathaway appears to be as bullish as ever on the future prospects of oil major Occidental Petroleum (NYSE:OXY). The company augmented its significant holding in OXY stock this month, adding to its already substantial stake.

Notably, this bet marks the first time Warren Buffett has increased his OXY stock holdings since September. Currently, Berkshire holds more than 200 million shares of the oil giant, worth roughly $12 billion. This subsequent purchase has elevated the conglomerate’s stake in the company to 22.2%, up from 21.4%.

While it was one of the top performers in the S&P 500 in 2022 and a key holding for Berkshire, Occidental Petroleum’s stock has dropped more than 5% in value this year. Indeed, weaker oil price dynamic have hurt the valuations of many top oil producing stocks. Occidental has been no exception.

That said, there’s a clear reason Buffett continues to hold on to his position in Occidental. The Oracle of Omaha believes in CEO Vicki Hollub, putting his faith explicitly behind her leadership style. It’s clear that Occidental is a cash flow producing machine, something Buffett also likes.

Over the long-term, I think Warren Buffett will certainly be proven right with this core holding.

Coca-Cola (KO)

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Coca-Cola’s (NYSE:KO) dividend growth has caught Warren Buffett’s attention and may also interest you.

Coca-Cola now offers its shareholders a yearly residual income of $1.84 per share. However, that payout is expected to grow in the future according to historical success.

Like other dividend paying stocks Warren Buffett owns, Coca-Cola is among the select group of Dividend Kings the Oracle of Omaha has stuck with for decades.

As Coke increases its earnings, the company passes on this increased value to shareholders via dividends and stock buybacks. Thus, it’s the kind of mature company a mega-conglomerate such as Berkshire Hathaway wants to own.

While Coca-Cola’s growth potential is likely more muted than other holdings in the Berkshire portfolio, this stock is about as stable and defensive as they come.

Those concerned about a potential recession on the horizon may want to consider adding such defensive positioning right now. Personally, KO stock is one of the best ways to do so, in my view.

On the date of publication, Chris MacDonald has a position in KO. 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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