3 Must-Buy Warren Buffett Stocks for Volatile Times Warren Buffett is a master of weathering volatility, and these three stock picks prove it.In his most recent shareholder letter, he says he prefers to own equities, from whole companies...
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This story originally appeared on MarketBeat
If there ever was a staunch investor who could carry his businesses and investments well over hard times, it's Warren Buffett.
In his most recent shareholder letter, he says he prefers to own equities, from whole companies to publicly traded stocks, keeping most of his net worth in equities.
Why buy Warren Buffett stocks during volatile times? Let's find out.
Why Buy Warren Buffett Stocks Now?
Why buy Buffett stocks now? Buffett tends to invest in companies that have a stronghold no matter what the economy is doing. You don't have to look far — just to Berkshire Hathaway, Buffett's insurance and investment empire. Its strong insurance businesses, subsidiaries and stakes in solid companies mean that it's built like a tank in a missile strike zone. It's a model to admire, and emulating how Buffett builds his portfolio is another way to plan your own stock picks. (However, good luck. Buffett seems to have an omniscience that nobody else has.)
Let's take a quick look at the primary considerations Buffett entertains before choosing stocks and how his preferences can help prime your portfolio:
- Company performance: How has the company performed? What is the return on equity in the long term? If a company's top competitors can't keep up, it could be a good opportunity in that industry.
- Debt: If a company has considerable debt, its earnings will likely go toward trying to take care of it, especially if growth comes from adding more debt. Look for companies that carry permanently low debt loads.
- Profit margins: Looking at profit margins over the course of several years offers one of the best ways to identify the right companies for your portfolio.
- Product uniqueness: What type of competitive advantage does a company have that can help it exceed its competition and position in the market?
- Share discounts: How cheap are shares? Companies that have good fundamentals but that trade below what they should — that are undervalued — offer the most opportunity for profiting possible.
Putting all of these considerations together makes for the best combination of possibilities, even during times of volatility, and Buffett has it down to a science.
3 Warren Buffett Stocks for Volatile Times
When you consider all the companies Buffett loves, it's hard to choose just three. However, we've made our best crack at it, especially during volatility.
The Coca-Cola Company (NYSE: KO)
We couldn't leave the Coca-Cola Company off the list. The Coca-Cola Company, a beverage company headquartered in Atlanta, Georgia, manufactures, markets and sells sparkling soft drinks, flavored and enhanced water and sports drinks, juice, dairy, and plant-based beverages. It also produces tea and coffee and energy drinks, as well as beverage concentrates and syrups. It also produces fountain syrups to fountain retailers like restaurants and convenience stores. It sells under brands Coca-Cola, Diet Coke/Coca-Cola Light, Coca-Cola Zero Sugar, Fanta, Fresca, Schweppes, Sprite, Thums Up, Aquarius, Ciel, dogadan, Dasani, glaceau smartwater, glaceau vitaminwater, Ice Dew, I LOHAS, Powerade, Topo Chico, AdeS, Del Valle, fairlife, innocent, Minute Maid, Minute Maid Pulpy, Simply, Ayataka, BODYARMOR, Costa, FUZE TEA, Georgia and Gold Peak brands. It operates through a network of independent bottling partners, distributors, wholesalers and retailers as well as through bottling and distribution operators.
In Q4 and full year 2021, global unit case volume grew 9% (in Q4) and 8% for the full year.
Net revenues grew 10% in Q4 and 17% for the full year. Organic revenues (non-GAAP) grew 9% for the quarter and 16% for the full year. Operating income declined 28% for the quarter and grew 15% in 2021. In addition, full-year EPS grew 26% to $2.25 and comparable EPS (non-GAAP) grew 19% to $2.32. Finally, cash flow from operations was $12.6 billion for the full year, up 28%.
During the fourth quarter, the company acquired the remaining 85% ownership interest in BODYARMOR, a line of sports performance and hydration beverages. The company also put a further emphasis on sustainability in the business with a new packaging target with a goal of 25% reusable packaging by 2030.
Bank of America (NYSE: BAC)
Bank of America Corp., headquartered in Charlotte, North Carolina, is a bank and financial holding company. It provides banking and nonbank financial services. It operates through consumer banking, global wealth and investment management, global banking and global markets segments. The consumer banking segment offers credit, banking, and investment products and services to consumers and small businesses. The global wealth and investment management segment offers a full set of investment management, brokerage, banking and retirement products. The global banking segment handles lending-related products and services, integrated working capital management and treasury solutions to clients as well as underwriting and advisory services. The global markets segment includes sales and trading services as well as research to institutional clients across fixed-income, credit, currency, commodity and equity businesses. Bank of America also has a segment consisting of asset and liability management activities, equity investments, non-core mortgage loans and servicing activities.
Q4 highlights include net income rose 28% to $7 billion, or $0.82 per diluted share as revenues grew faster than expenses. Revenue increased 10% to $22.1 billion and net interest income was up $1.2 billion, or 11%, to $11.4 billion. Noninterest income was up 8% to $10.7 billion and provision for credit losses improved by $542 million.
DaVita Inc. (NYSE: DVA)
DaVita Inc., headquartered in Denver, Colorado, provides medical care services through kidney dialysis services in the United States for patients suffering from chronic kidney failure. The company also offers pharmacy services, disease management services, vascular access services, clinical research programs, physician services, direct primary care, end-stage renal disease and comprehensive care.
For the full year 2021, diluted earnings per share from continuing operations was $8.90, an increase of 39.3% from the prior year, and adjusted diluted earnings per share from continuing operations was $9.13, an increase of 25.8% from the prior year. Q4 diluted earnings per share from continuing operations was $1.79, an increase of 7.2% from last year and adjusted diluted earnings per share was $2.02, an increase of 21.0% from the prior year.
Consolidated revenues were $2.944 billion for the quarter and $11.619 billion for the year's end on December 31, 2021.
Bust Volatility with These Picks
He reads annual reports cover-to-cover, notes the minutiae of company progress and identifies strategies. He's also famous for keeping company shares forever. Targeting these three gives you a solid strategy for volatile times.