3 iconic Warren Buffett stocks to back the truck in any market

Warren Buffett earned the title of “Oracle of Omaha” through his 60 years of success at Berkshire Hathaway. One of the world’s best investors of all time, Buffett has certainly become a Mount Rushmore of investors, at least in the minds of those with a long-term investment time horizon. Considering the returns Berkshire Hathaway (NYSE:BRK-B) has delivered over the years, and investors continue to pay close attention to the individual stocks Mr. Buffett is betting on at any given time, and his fairly consistent ability to beat the market. Now is no different.

The thing is, Warren Buffett has been in sell mode in recent quarters, reducing stakes in some of his largest holdings while maintaining or even adding to other positions. The Oracle of Omaha seems to expect amplified turmoil on the horizon, and many in the market are now shifting their outlook to a much more bearish one in line with Buffett’s recent actions.

That said, given the long-term nature of Berkshire’s portfolio, I would imagine that certain positions are held (and potentially improved) in a down market environment. Here are three such stocks that I think investors might want to consider backing the truck if things get bad enough.

Key points about this article:

• Warren Buffett is known as one of the greatest investors of all time because his publicly traded portfolio beat the market for very long periods of time.
• While the Oracle of Omaha has been in sell mode lately, here are three of his long-term picks that I wouldn’t be surprised to see Buffett add to early dips.
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Coca-Cola (KO)

A can of Coca-Cola with sweat beads

Coca cola (NYSE:KO) is among the most recognizable global brands in Berkshire’s portfolio, and certainly a stock that many long-term investors have been grateful to own. Aside from the stock’s 2.7% dividend yield, it’s a top-tier giant that has continued to post relatively strong global growth in the face of increasingly daunting macroeconomic headwinds.

The company’s ability to weather past crises (and its likely ability to weather any storms on the horizon) has a lot to do with the company’s brand and pricing power in its core market. A global leader in the beverage market, Coca-Cola has expanded into other key categories such as snacks in an attempt to gain a growing market share in the discretionary sector.

Coca-Cola’s steady growth and adaptability have cemented the company’s position as a reliable cash cow. Despite a forward price-to-earnings ratio of around 24 times, the company’s premium valuation relative to its peers is justified. This is because in times of turmoil, I believe the value of the Coca-Cola brand will allow for a price differential that its peers may not be able to maintain.

Despite a 1% decrease in revenues in Q2Coca-Cola posted solid growth in its Latin American and Asia Pacific markets. Assuming this globalization trend continues, Coca-Cola could be positioned for growth (or at least stabilization) in a market where other players may be forced to relinquish share. In the face of what could be some strong macro headwinds on the horizon, this is a stock I think is worth owning here.

Apple (AAPL)

An image of two iPhones side by side

Apple (NASDAQ:AAPL) continued its comeback as the world’s largest company (or among the largest). Currently owns a $3.4 trillion market capApple remains Buffett’s largest holding by portfolio weight, despite the large reduction of roughly half of Apple’s stake in recent quarters.

Warren Buffett started buying AAPL stock in 2016, when the stock was trading closer to 10 times earnings. Today, the stock again commands a premium multiple of around 34 times trailing earnings, which is considerably higher than the overall market. Perhaps Buffett’s strategy is to take some of the cream off the top of what has been an incredible run (and I don’t imagine he will completely liquidate his position). But I would also expect that if this consumer discretionary giant reaches the valuation levels it once saw a decade or so ago, Buffett himself may start backing his own truckload of cash to buy more shares at cheaper levels.

Apple recently PUT its iPhone 16 range at the ‘Glowtime’ event in Cupertino. The company’s new smartphone models include the iPhone 16, iPhone 16 Plus, iPhone 16 Pro and iPhone 16 Pro Max. Designed with Apple Intelligence AI, these phones feature improved chips and the programmable action button, now available on base models.

There is a possibility that Apple’s growth rate will accelerate from here and we will get the soft landing that everyone expects. But if Apple goes down alongside the broader market, it’s a stock I think investors will want to buy in any serious downturn.

Moody’s (MCO)

A web browser searches the Moody’s website on a smartphone

Moody’s (NYSE:MCO) ranks seventh in terms of portfolio-weighted holdings in Buffett’s publicly traded stock portfolio. Indeed, his ability to add exposure to Moody’s over the years is a testament to how Buffett thinks about the ratings agency and financial services firm, and suggests he believes the company has plenty of growth ahead of it.

In Q2 2024Moody’s reported revenue of $1.8 billion, reflecting a 21 percent year-over-year increase. The company continued to expand through strategic partnerships and constant innovation, which led Buffett’s investment in the company (which began in 2000) to absolutely increase in value. MCO stock currently makes up about 3.8% of Berkshire’s total portfolio, making it a significant stock for investors to watch going forward.

The fact that Buffett hasn’t shorted this stock in years is a testament to his belief that there’s still room to run with this name. The company’s business model, which provides essential data and insights to investors looking to navigate global risks and opportunities, is one that has delivered strong cash flow. The company’s services segment saw a 36% year-over-year increase in revenue, driving its recent quarterly results, and could be the leg of future growth.

Given a recent increase in guidance and the potential for low growth in teenage earnings for the foreseeable future, this is a stock I think could be worth adding on major dips in the future.

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