3 Top Buffett Stocks to Buy and Hold for the Long Term

When it comes to picking stocks, perhaps no investor has done it better than Warren Buffett Berkshire Hathaway for such a long time. Between 1965 and 2023, the conglomerate’s portfolio achieved average annual returns of 20%, well above the 10% average return of S&P 500.

The structure of that portfolio has changed over the years, but it has generally focused on companies outside the technology sector. But after avoiding tech-related stocks for decades, Buffett finally saw the value in the industry over the past decade and has come heavily into the sector. While Berkshire recently fell on its massive Apple position, technology remains a critical part of the portfolio.

If you’re thinking of following Buffett’s lead, these three Berkshire-owned tech stocks happen to be great buys for investors today.

1. T-Mobile

The telecom giant T-Mobile USA (TMUS 0.95%) has provided market returns over the past few years. T-Mobile came into being in 1994 as a spin-off from the US Deutsche Telecomfocused on cellular communications. As such. avoided some of the legacy costs (related to landlines) that held back its main competitors, AT&T and Verizon Communications. Growth investors saw this as a reason to consider its stock.

As a discount wireless provider, T-Mobile has increased its market share by offering lower prices. That approach changed somewhat in 2020 when the company acquired Sprint and its massive spectrum portfolio. This was also when T-Mobile and its peers launched 5G service, and the addition of more spectrum made it more competitive in terms of quality.

T-Mobile has grown to the point where it can now match its peers and offer a dividend (started in December 2023). It recently increased its dividend by 35%, so it now totals $3.52 per share annually. That growth gives T-Mobile a dividend yield of 1.7%. While that doesn’t match its peers, it makes up for it by having a stock that’s up more than 45% over the past year, bringing investors sizable returns.

Finally, new investors can still buy this stock at a P/E ratio of 25. Given its growth relative to that valuation, this is one of Buffett’s stocks that can still generate significant returns for new investors.

2. No Holdings

Parent of NuBank Not Holdings (NOT 0.36%) is one of Buffett’s lesser-known stocks. Even though it is the largest digital bank outside of Asia, the fact that it operates in Brazil, Mexico and Colombia makes it easy for US investors to miss out. Moreover, the banking sector in Latin America was, until recent years, dominated by a few large banks in each country, which catered to larger customers, leaving a large portion of the lower-income population unserved. NuBank changed that by giving millions of consumers in those countries their first credit card.

So successful is this approach that 56% of Brazilian adults have at least one NuBank account. Now, it’s trying to replicate that success in Mexico and Colombia, and early indications are that this approach is succeeding.

At the end of the second quarter of 2024, its customer base had reached 105 million, with all but 9 million of its customers banking in Brazil. The total number of customers increased by 21 million compared to the previous year. Given that growth, it should come as no surprise that its stock is up nearly 120% over the past year.

At a P/E ratio of 47, Nu’s earnings multiple may not fully reflect the growth rate. Given its potential for further expansion, this fintech stock should continue to enrich its shareholders for some time to come.

3. Amazon

Buffett once remarked that he was “too stupid” to imagine the potential Amazon (AMZN -1.67%). However, Berkshire finally bought a stake in 2019 as the e-commerce and cloud computing conglomerate’s potential became too lucrative to ignore. Since then, Amazon’s stock has increased in value by more than 140%.

New investors can still benefit from its growth potential despite its sizeable $2 trillion market cap. Even though its online sales arm might be a loss leader, it supports digital ads, subscription and third-party sales services that are quite profitable.

Image source: Statista.

Moreover, it earns most of its operating income from Amazon Web Services (AWS), its market-leading cloud computing arm. Workloads continue to move to the cloud, and with the rise of artificial intelligence (AI), AWS has become even more critical for the IT industry. Such businesses should fuel faster growth than one might expect from such a large company.

Amid AI-fueled growth, its stock is up 50% in the past year. Also, despite these gains, the stock is selling at a P/E ratio of 46. That’s near multi-year lows for Amazon and significantly less than its retail rival. Costco Wholesalehis 56 multiple wins. More importantly, such an assessment is an excellent opportunity to add actions. It’s not too late to take advantage of this growth story.