3 Warren Buffett Stocks to Load Right Now

Warren Buffett has created extraordinary wealth for Berkshire Hathaway shareholders for the last 58 years. From 1965 to 2023, the gains amounted to 4,384,747%. The company’s $284 billion stock portfolio is a treasure trove of solid investment ideas.

Recently, three Motley Fool contributors were asked to highlight outstanding Berkshire-owned stocks that they think would make great long-term investments. They chose Amazon (AMZN -0.27%), The ultimate beauty (ULTA 1.41%)and Apple (AAPL -0.12%). Here’s why.

Incredible opportunities, amazing price

Jennifer Saibil (Amazon): Interest in all things artificial intelligence (AI) is skyrocketing, and Amazon is one of the companies taking full advantage of what AI can offer. It has been using various forms of AI for years and continues to innovate by incorporating recent advances. As the world’s leading cloud service provider, it now benefits from this extensive investment in AI. Amazon offers a host of AI services that go beyond the generative AI tasks (such as AI-created content and images) that began capturing the world’s attention nearly two years ago. Its offerings take on all sorts of tasks that end up bringing incredible value to its customers.

In particular, Amazon Web Services (AWS) offers developers more solutions to handle tedious coding tasks, including writing code from requests and debugging, to free up time for creative work. These could be game-changing solutions for AWS customers, and management is seeing a strong response.

Amazon partners with AI leaders such as Nvidiabut they are also developing their own AI infrastructure to meet the demand. Management said that in the past 18 months, it has launched more than double the AI ​​and machine learning features of all its competitors combined. It is well positioned to maintain its leadership in cloud computing and add new customers.

Amazon uses artificial intelligence in its multiple business segments, starting with its core e-commerce unit. Its wealth of data related to consumer preferences and shopping habits can be leveraged to provide shoppers with more accurate search results and recommendations. It uses the same pool of data to improve its advertising business, which helps advertisers reach customers on its e-commerce site as well as its Prime streaming network.

Amazon grew revenue 10% year over year in the second quarter and nearly doubled its operating income. Despite these strong results, Amazon’s stock fell after its recent earnings report, as it fell slightly below analysts’ expectations and guidance was weaker than the company expected. The stock has since recovered somewhat, but still trades at a price-to-earnings (P/E) ratio of 43, which is near its lowest level in years. Amazon stock will continue to rise, which means now is a good time to catch it on the way.

Ready for close-up

Jeremy Bowman (Ulta Beauty): One of Berkshire’s newest stocks, Ulta Beauty, still looks like a great buy, even after the stock rebounded after it was first reported on Aug. 14 that Berkshire had started a position last quarter.

In many ways, Ulta Beauty looks like a Buffett classic. The company is an industry leader with more than 1,400 stores nationwide, making it the largest pure-play beauty retailer. Ulta also offers salon services in its stores, driving in-store visits and adding a competitive advantage over online retailers. However, Ulta has struggled recently, which is why the stock is trading at a discount from its previous peak.

Comparable sales in the second quarter fell 1.2 percent, and the company cut its guidance for the full year. That said, there are good reasons to bet on the stock coming back. First, much of the consumer discretionary sector is facing headwinds as inflation has caused consumers to cut back on spending.

Future interest rate cuts should help give the company (and consumer spending) a boost. Ulta also continues to open new stores, with plans to add 60-65 this year, showing its confidence in long-term demand and that there is room in the market for new stores. It is also expected to enter the Mexican market next year, potentially paving the way for further international expansion.

In the long term, the company plans to operate at least 1,700 stores in the US and has a partnership with Aim that it is considering reaching 800 stores positioned in Target stores.

Ulta currently trades at a P/E ratio of just 15, which looks like a bargain if the company can return to growth. Assuming it can get back on track, the stock looks like an easy winner from here.

The most valuable brand in the world

John Ballard (Apples): Buffett has previously said that Apple is better than any business Berkshire owns, which explains why Buffett has let Apple’s position grow to a whopping stake worth more than $150 billion at the end of 2023. Even in light of Berkshire’s recent sale of part of its massive Apple stake, Buffett said at this year’s annual meeting that Apple is a wonderful business that will likely remain Berkshire’s largest investment at the end of the year.

Apple’s iPhone sales growth has stagnated over the past year, which can mainly be attributed to weak consumer spending trends. It has also faced increasing competition in China, but is doing well everywhere else. Importantly, the installed base of active devices continues to reach new highs, reaching over 2.2 billion earlier this year. This growth will likely continue as Apple releases new products, with the Apple Vision Pro headphones being the newest product line.

In the short term, Apple has a great chance to deliver profit for shareholders after it launches Apple Intelligence. With advanced AI features coming to the iPhone, Apple could gain share in the global smartphone market, drive revenue growth, and most importantly, increase margins from higher app sales and subscriptions in its segment of Services.

Overall, Buffett appreciates the stickiness of the brand, given that customers are rarely beyond the reach of their iPhones. In Brand Finance’s Top 500 for 2024, it was rated as the most valuable brand in the world. Investing in strong brands has been a hallmark of Buffett’s investment style throughout his career, and the growing value of the brand will ultimately provide returns for shareholders.