Why These Two Berkshire Hathaway Holdings Are Strong Investment Picks
Since 1965, Berkshire Hathaway has delivered an impressive 20% annualized return, significantly outperforming the S&P 500. This track record has solidified Warren Buffett as one of the greatest investors of all time.
For those looking to follow Buffett’s investment philosophy, analyzing Berkshire’s $271 billion stock portfolio can provide valuable insights. While every investor has unique financial goals, some of Buffett’s top holdings offer compelling opportunities for long-term growth.
Currently, two no-brainer Warren Buffett stocks stand out as strong buys:
📌 Amazon (NASDAQ: AMZN) – A dominant force in e-commerce, cloud computing, and AI.
📌 American Express (NYSE: AXP) – A financial powerhouse with significant exposure to consumer spending and credit markets.
Let’s take a deeper look at why these two companies remain key Berkshire Hathaway holdings and why investors should consider them right now.
Amazon: A Market Leader in E-Commerce, Cloud, and AI
Amazon’s Multi-Sector Dominance
Amazon is not just an e-commerce giant; it’s a leader in multiple high-growth industries. With nearly 40% of all e-commerce transactions in the U.S. flowing through Amazon.com, the company has a dominant market position.
But Amazon’s real strength lies in its diversification and innovation, particularly in:
✅ Amazon Web Services (AWS) – The world’s leading cloud computing platform, driving high-margin revenue.
✅ Artificial Intelligence (AI) Solutions – Strong demand for Amazon’s AI-driven data processing and cloud-based tools.
✅ Digital Advertising – The fastest-growing segment, with Q4 revenue surging 18% YoY to $17.3 billion.
Amazon’s Financial Growth and Profitability
Amazon has consistently maintained a strong revenue growth rate, but recent years have seen a major improvement in profitability.
🔹 2024 Operating Income Growth: +86% YoY due to cost-cutting and efficiency improvements.
🔹 Projected Operating Income Growth (2024-2027): 21% CAGR (Compound Annual Growth Rate).
This positive financial outlook has boosted investor confidence, yet the stock remains 20% below its all-time high from February 2024.
Amazon’s Valuation and Buying Opportunity
Despite its strong growth trajectory, Amazon is currently trading at a forward P/E ratio of 30.6, presenting a compelling entry point for long-term investors.
📈 Five-Year Stock Performance: +131%
📉 Current Discount: -20% from peak
With continued expansion in AI, cloud computing, and advertising, Amazon remains one of the best Buffett stocks to buy today.
American Express: A Buffett Favorite with Strong Long-Term Growth
Why Buffett Loves American Express
Berkshire Hathaway owns nearly 22% of American Express, making it one of Buffett’s most significant holdings. Unlike Amazon, which is a relatively smaller position in Berkshire’s portfolio, American Express is a core investment in Buffett’s financial sector strategy.
Amex’s Competitive Advantage
American Express operates in a unique space, combining:
✔️ Premium Credit Card Offerings – Targeting affluent consumers who spend more and carry lower credit risk.
✔️ Exclusive Merchant Agreements – Higher transaction fees provide strong profit margins.
✔️ Loyalty and Membership Programs – Drives customer retention and repeat spending.
Amex’s Financial Performance and Resilience
Despite economic headwinds, American Express has shown steady revenue and earnings growth:
🔹 Q4 2024 Revenue Growth: +11% YoY, driven by higher spending volumes.
🔹 Net Income Expansion: Strong cost management supports bottom-line growth.
🔹 Dividend Growth: AXP continues to reward shareholders with strong dividend payouts.
Stock Valuation and Long-Term Potential
American Express has outperformed the broader market, but it still presents an attractive valuation compared to other financial stocks.
📈 Five-Year Stock Performance: +95%
📉 Current P/E Ratio: 16.8 – a reasonable valuation for a blue-chip financial stock.
With rising consumer spending, travel demand, and digital payment adoption, American Express is well-positioned for continued growth.
Bottom Line: Why Investors Should Consider These Buffett Stocks Now
🔹 Amazon and American Express remain two of Warren Buffett’s top holdings for a reason—both companies dominate their industries, generate strong cash flows, and have promising long-term growth prospects.
🔹 Amazon is a high-growth tech leader, while American Express is a steady financial powerhouse—offering diversification for investors.
🔹 Both stocks are currently trading below their highs, presenting an opportunity for long-term investors to buy in at reasonable valuations.
For investors looking to mirror Buffett’s investment strategy, Amazon and American Express are no-brainer stocks to consider.
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