Warren Buffett is known for his investing prowess. Two of his largest holdings are Apple and Coca-Cola. These stocks make up a significant portion of Berkshire Hathaway’s portfolio.
Apple is Berkshire’s biggest position, valued at around $135 billion. Wedbush analyst Dan Ives recently raised his price target on Apple to $275. This implies a potential gain of about 29% from current levels.
Ives is excited about Apple’s moves into generative AI. New AI features could give customers a reason to upgrade their older iPhones. However, this anticipated growth may already be priced into the stock.
Apple shares trade at over 32 times forward earnings, a high valuation. Coca-Cola is Berkshire’s fourth-largest holding, worth about $24.5 billion. Buffett has held Coca-Cola for over a decade.
In that time, the stock has delivered a 138% total return. Coca-Cola’s business has grown steadily in recent years.
Buffett’s investment strategy insights
Net income is up 10.4% and sales have risen 19.2% since 2021. Argus analyst Taylor Conrad expects Coca-Cola’s profit margins to expand. He has a $72 price target on the stock.
Coca-Cola shares trade at a more reasonable 22 times forward earnings. The stock also pays a 3.1% dividend yield. This provides a reliable income stream for investors.
Apple and Coca-Cola offer different investment profiles. Apple has high growth potential but also carries more risk. Its valuation is lofty and dependent on the success of new AI initiatives.
Coca-Cola provides steadier, lower-risk returns. The company has a strong brand and growing business. Its stock is more reasonably valued and pays an attractive dividend.
Investors should consider their goals and risk tolerance when weighing these two Buffett favorites. Both could have a place in a diversified portfolio. Following Buffett’s investments is a good starting point for many investors.
