By Sean Williams, The Motley Fool, Trades Of The Day, 2024-07-01
If you've ever wondered why Berkshire Hathaway (BRK.A) (BRK.B) CEO Warren Buffett draws in the neighborhood of 40,000 investors to his company's shareholder meeting each year, look no further than his track record.
Since taking over the CEO role in the mid-1960s, the “Oracle of Omaha” has overseen a nearly 4,964,000% return in his company's Class A shares (BRK.A), which compares quite favorably to the roughly 36,000% total return, including dividends paid, for the broad-based S&P 500 over the same span.
For nearly six decades, Buffett and his top-notch investment team have had a knack for picking out time-tested bargains hiding in plain sight.
At the moment, Berkshire has stakes in 44 stocks and two exchange-traded funds spanning $388 billion of invested assets. But among these holdings are three Warren Buffett stocks that represent screaming buys for the second half of 2024, and likely well beyond.
Amazon
The first Warren Buffett stock that stands out for all the right reasons for the second half of 2024 and well beyond is e-commerce leader Amazon (AMZN).
The knock against Amazon has always been its relatively “expensive” valuation, at least when using traditional fundamental metrics, such as the price-to-earnings (P/E) ratio. While the time-tested P/E ratio works great when attempting to value mature businesses, this go-to metric tends to come up short when analyzing fast-growing companies that are regularly reinvesting their cash flow back into their operations.
Chances are that you're familiar with Amazon because of its superior e-commerce platform. In 2023, Amazon is estimated to have garnered a nearly 38% share of U.S. online retail sales. While this would, in theory, expose the company to weakness if the U.S. or global economy were to fall into a recession, the important thing to recognize about Amazon is that its operating cash flow and income almost exclusively originate from its faster-growing ancillary operations.
Chevron
A second no-brainer Warren Buffett stock that's begging to be bought for the second half of 2024 (and beyond) is global energy giant Chevron (CVX).
The clearest headwind current and prospective Chevron shareholders have to contend with is the prospect of a recession taking shape in the U.S. or abroad. Oil and gas stocks tend to ebb-and-flow with the spot price of crude oil and natural gas. During periods of economic weakness, it's not uncommon for commodity-driven companies to struggle.
The good news for Chevron is that macro factors are decisively working in its favor. Even with select predictive indicators cautioning of a coming recession — e.g., the first drop off in U.S. M2 money supply since the Great Depression — the U.S. economy has remained resilient.
Coca-Cola
The third Warren Buffett stock that's a screaming buy for the second half of 2024, and likely well beyond, is beverage behemoth Coca-Cola (KO).
Whereas an economic downturn is arguably the biggest enemy for Amazon and Chevron, the prospect of above-average inflation is typically viewed as the most front-and-center headwind for consumer staples companies. When the price of goods and services is rising at an above-average rate, there's always a concern that consumers may be forced to pare back their spending.
