Investing Like Buffett: Two Stocks to Consider for Long-Term Growth
Amazon and Coca-Cola: Stocks with Potential for Significant Returns
Warren Buffett, renowned investor and CEO of Berkshire Hathaway, is known for his long-term investment strategy. Holding stocks indefinitely has been a key factor in his success. However, the timing of stock purchases is also crucial. Currently, there are two stocks in Berkshire Hathaway’s portfolio that analysts believe have the potential for significant growth. With updated price targets from Citi analysts, these stocks could see gains of up to 37% and 14% over the next 12 months.
Amazon: Dominating E-commerce and Cloud Services
Amazon’s Strong Position in E-commerce and Cloud Services
Buffett recently trimmed Berkshire’s stake in Amazon, but Citi analyst Ronald Josey believes the company still holds immense potential. Amazon’s shares have already increased by 83% this year, but Josey has raised his price target to $210, implying a further 37% gain over the next 12 months.
One of Amazon’s strengths is its dominant position in the American e-commerce industry. Its third-party retailers are tied to the platform, evident from the significant increase in ad sales. In the third quarter alone, Amazon generated an additional $12.1 billion in ad payments from third-party merchants, a 26% increase from the previous year. Moreover, Amazon Web Services (AWS), the largest provider of cloud services in the US, continues to experience resilient growth. In Q3, AWS revenue rose by 12% year over year to $23 billion. With the global market for cloud services projected to grow by 14.1% annually through 2030, AWS has substantial room for expansion.
Coca-Cola: Steady Dividends and Resilience
Coca-Cola’s Dividend Growth and Resilience Against Market Trends
Coca-Cola has become Berkshire Hathaway’s fourth-largest equity holding, valued at over $23 billion. Although the company’s shares have declined by 8% in 2023, Citi analyst Filippo Falorni predicts a rebound in 2024. Falorni recently raised his price target for Coca-Cola to $67 per share, suggesting a 14% gain over the next 12 months.
One of Coca-Cola’s main attractions for investors is its consistent increase in dividend payments. The company has raised its payout for 61 consecutive years, making it a reliable source of income. Berkshire Hathaway, with its 400 million shares, stands to receive over $736 million in dividends from Coca-Cola in 2024 if the streak continues.
Despite concerns about the impact of weight management drugs on soda sales, Coca-Cola has shown resilience. While North American case volume remained steady in Q3, revenue increased by 11% year over year, excluding the negative effects of a stronger dollar. With a current yield of 3.1% and the potential for further growth, Coca-Cola shares offer an attractive option for long-term investors.
Conclusion:
Investing like Warren Buffett involves not only holding stocks for the long term but also buying them at opportune times. Two stocks in Berkshire Hathaway’s portfolio, Amazon and Coca-Cola, show promise for significant growth. Amazon’s dominance in e-commerce and cloud services positions it for continued success, while Coca-Cola’s steady dividends and resilience make it an attractive investment. However, investors should carefully consider the risks associated with each stock and their own risk tolerance before making any investment decisions.