3 Billionaire No-Brainer Stocks to Buy Right Now

Some would have you think that investing is incredibly complicated, but at its core, a sound philosophy boils down to buying great companies and holding onto them for the long term. It’s as simple as that.

Where do you find great companies? Among the various sources of inspiration, a common starting point is investigating the billionaire’s stock choices. By doing this, it is obvious that Alphabet (GOOG 1.17%) (GOOGL 1.11%), Chevron (CVX 1.30%)and Kraft Heinz (KHC 1.10%) they are all high-quality stocks that occupy important positions in the portfolios of billionaires. Even better: they’re all hanging on the clearance rack.

The alphabet: loved by billionaires

In addition to its popularity among ordinary retail investors, Alphabet stock also holds prominent positions among the holdings of many billionaires. Of the nine stocks Bill Ackman holds in his Pershing Square Capital Management portfolio, Alphabet is the fourth-largest position, accounting for about 13% of the holdings as of the end of the second quarter of 2024.

Ray Dalio is another billionaire Alphabet enthusiast; was the third-largest position among the 877 stocks in his Bridgewater Associates portfolio at the end of the second quarter.

With Alphabet recently losing an antitrust lawsuit, bears fear the potential consequences — such as the court forcing the company to pay significant fines, as well as requiring it to change its business practices.

While these are valid concerns, this is highly unlikely to spell disaster for a company that is not only a leader in artificial intelligence (AI) but also an advertising force thanks to its ownership of YouTube and its retail presence across Android and Fitbit — various efforts. which contributes to its formidable financial position. In the first half of 2024, for example, Alphabet reported net income of $47.3 billion and operating cash flow of $55.5 billion.

Alphabet’s Class C shares are currently valued at 23.6 times trailing earnings, a discount to their five-year average earnings multiple of 26.2 and S&P 500price-to-earnings (P/E) ratio of 29.2.

Chevron: An undervalued energy stock

Those who follow Warren Buffett will surely recognize Chevron stock: it was in Berkshire Hathaway portfolio for several years now. The Oracle of Omaha also has oil slick exposure through its position in the Occidental Oilalthough Chevron is the larger position, accounting for 5.6% of Berkshire’s portfolio.

Shares of the oil major have fallen about 4% since it reported financial results for the second quarter of 2024. Reporting earnings per share (EPS) of $2.43, Chevron failed to meet analysts’ expectations of $2.93.

But this is no indication that the company is no longer an ideal energy stock. First, Chevron has demonstrated its strong commitment to rewarding shareholders by increasing its dividend for 37 consecutive years. Over the past three years, it has generated strong free cash flow to fund its dividend, and this is likely to extend in the near term, with management forecasting average annual free cash flow growth of over 10% with the price per barrel of Brent. crude oil averaging over $60.

CVX dividend per share (annual); data by YCharts.

Priced at 7.3 times operating cash flow, Chevron stock — along with its 4.4% forward dividend yield — looks particularly attractive in light of its five-year cash flow multiple of more than 8 ,3.

Kraft Heinz: Tasty, high-yielding dividend

Like Alphabet, Kraft Heinz is another stock found in the portfolio of more than one billionaire. In addition to the Berkshire Hathaway portfolio, the food and beverage company is also owned by the Bill & Melinda Gates Foundation Trust.

Although the S&P 500 is up more than 17% year-to-date, investors have decided to stop cheering on Kraft Heinz stock. In the first six months of 2024, it posted year-over-year declines in both operating income and net income of 30.4% and 50.7%, respectively — not very auspicious. But to conclude that the company is in serious trouble seems unreasonable.

First, Kraft Heinz generates strong cash flow. In the second quarter, for example, the company reported operating cash flow of $1.7 billion, up 8.1 percent from last year, and free cash flow of $1.2 billion, a 8.7% increase compared to the same period last year.

Management forecasts year-over-year growth of 1% to 3% for adjusted EPS, suggesting the second half of the year will be more profitable.

For those looking to gain exposure to a consumer staples stock, Kraft Heinz — and its tasty dividend with a forward yield of 4.5% — is an excellent choice.

Three Big Billionaire-Backed Stocks to Buy Now

Not all stocks found in billionaires’ portfolios will be suitable for those of us with less personal wealth. But Alphabet, Chevron and Kraft Heinz are all worthy considerations that can satisfy various interests of retail investors. For those keen on passive income, Chevron and Kraft Heinz are great picks, while AI-focused investors would be wise to take a closer look at Alphabet.