While the current rally may have more legs, there are some very dark clouds on the horizon for the rest of 2023. Profligate government spending has propped up the economy for the past decade or more. While the government can continue to print money, consumers cannot. With all the old largesse from handouts having long been spent, many Americans are ramping up credit card debt at a record pace. In fact, for the first time ever, consumers now have more than $1 billion on credit cards with interest rates as high as 20% or more.
If any investor has stood the test of time, it is Warren Buffett, and with good reason. For years, the “Oracle of Omaha” has had a rock-star-like presence in the investing world. His annual Berkshire Hathaway shareholders meeting draws literally thousands of loyal fans who are investors. Known for his long buy-and-hold strategies and his massive portfolio of public and private holdings, Buffett remains one of the preeminent investors in the world.
Berkshire Hathaway stock has been on fire over the past year and hit an all-time high on Monday. Investors cite the huge Apple move higher (which is the biggest position in the portfolio) but also point to the massive trove of cash the fund has (which has risen to almost $150 billion) as another huge positive. Buffett has been buying ultra-safe short-term Treasury bills that pay the highest yield in years. Operating earnings jumped a stunning 6.6% year over year as insurance earnings helped to power gains.
We screened the Berkshire Hathaway portfolio looking for the potential big-time winners in the portfolio and found five that look like solid ideas for investors now. All pay dependable dividends and are rated Buy at top Wall Street firms. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
Apple
It is almost hard to comprehend that this legacy technology giant makes up a stunning 45% of the Berkshire Hathaway portfolio. Apple Inc. (NASDAQ: AAPL) designs, manufactures and markets consumer electronics worldwide, including the iPhone line of smartphones, the Macintosh family of notebook and desktop computers, iPad multi-purpose tablets, and such wearables and accessories as AirPods, Apple TV, Apple Watch, Beats and HomePod.
It also provides AppleCare support and cloud services, and it operates various platforms, including the App Store, that allow customers to discover and download applications and digital content, such as books, music, video, games and podcasts.
Its services include Apple Arcade, a game subscription service; Apple Fitness+, a personalized fitness service; Apple Music, which offers users a curated listening experience with on-demand radio stations; Apple News+, a subscription news and magazine service; Apple TV+, which offers exclusive original content; Apple Card, a co-branded credit card; and Apple Pay, a cashless payment service. Apple also licenses its intellectual property.
The company serves consumers, and small and mid-sized businesses and the education, enterprise and government markets. It distributes third-party applications for its products through the App Store. The company also sells its products through its retail and online stores, and direct sales force, as well as third-party cellular network carriers, wholesalers, retailers and resellers.
Shareholders receive a 0.53% dividend. Wedbush has a $230 price target on Apple stock. The consensus target is $201.18, and the shares closed on Thursday at $177.97.
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