Warren Buffett’s annual Berkshire Hathaway shareholder letter was released last weekend. And as always, there was a lot for investors to reflect upon. One message that really stood out to me was that investors should keep holding their winning stocks.
With that in mind, here are three winning Warren Buffett shares that I’m committed to not selling.
Buffett’s favourite stock
It would be remiss of me not to start with Apple (NASDAQ: AAPL). Buffett has trumpeted the company as a “family jewel“, and three years ago he said it’s “probably the best business I know in the world“.
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That’s why Apple stock comprises some 41% of Berkshire’s invested assets today. And it was one of only three stocks Buffett and his investing team added to during the fourth quarter of last year.
The company has all the traits the Oracle of Omaha looks for in a business. It’s run by top-tier management, with iconic brand status, enjoys tremendous pricing power, and pays a growing dividend underpinned by a fortress-like balance sheet.
That doesn’t mean there isn’t risk. One concern is the so-called ‘chip war’ between the US and China over advanced semiconductor technology. If escalated, this could threaten Apple’s ability to source microchips for its iPhones, iPads, and iMacs. However, the company is already ahead of the curve here. It announced a couple of years ago that it will buy US-made chips in the future to de-risk its supply chain.
Looking ahead, I expect the company to steadily increase prices to maintain profits. And it wouldn’t surprise me if the rumoured Apple VR headset becomes yet another smash hit product in the future.
A cashless world
The second stock is payment processor Visa (NYSE: V). The world is moving away from cash transactions, and Visa is enabling and directly benefiting from this powerful trend. The company processed $11.6trn in 2022!
One current concern is that the company is tied to the economic cycle. Less spending means less processing volumes, and ultimately less profits. So both continued high inflation and a potential global recession remain risks.
However, the payment processor also famously benefits from inflationary pressures, as it takes a small cut of every transaction flowing through its networks. If your weekly supermarket shop suddenly costs more, then the company will earn more (assuming you’re using a Visa card, of course).
Longer term, I believe the company has a massive opportunity to expand into underbanked regions of the world. Most transactions in Asia, Africa, and Latin America are still conducted in cash. So the untapped market opportunity remains vast, which is why I’m not selling the stock.
Finally…
Buffett also owns Diageo stock, albeit a small position in the company’s US-listed shares. The drinks giant owns timeless brands such as Johnnie Walker, Guinness, and Smirnoff.
While true that the company is facing macroeconomic headwinds, I think these will be forgotten in time. Growing demand in Asia and elsewhere for its premium-priced spirits should underpin profits for decades. So I’m not selling.
Of course, my commitment to any one particular stock isn’t absolute. New realities could emerge, forcing me to reassess things. But as things stand, I cannot imagine parting ways with these three Warren Buffett stocks. I will let them bloom indefinitely.
