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, he remains one of the preeminent investors in the entire world.
The on-and-off rally since the beginning of the year has been a welcome relief for beleaguered investors. However, there are some dark clouds on the economic horizon. Massive layoffs and manufacturing slowing. Inflation that, while dropping, is still way above the Federal Reserve’s target. Tensions with China, the ongoing Russia-Ukraine war and the new conflict in the Middle East. These are all concerns that investors need to be very wary of.
We screened the Berkshire Hathaway portfolio, looking for companies that appear poised to thrive in the current higher interest rate environment. Some of the following seven Warren Buffett stocks could very possibly benefit. They are all rated Buy across Wall Street. Yet, it is important to remember that no single analyst report should be used as the sole basis for any buying or selling decision.
This top bank stock has rallied nicely off the lows, and Buffett bought $2.5 billion worth of stock back in the summer of 2022. Citigroup Inc. (NYSE: C) is a leading global diversified financial service company that provides consumers, corporations and governments a broad range of financial products and services. (See how megabanks have fared since the financial crisis.)
The company offers services such as consumer banking and credit, corporate and investment banking, securities brokerage, transaction services and wealth management. And it operates and does business in more than 160 countries and jurisdictions in North America, Latin America, Asia and elsewhere.
Citigroup stock trades at a still cheap 7.5 times estimated 2023 earnings. So, it looks quite reasonable in what remains a volatile stock market and in a sector that has dramatically lagged.
Investors receive a 5.34% dividend. Oppenheimer has an $82 price target on Citigroup stock. The consensus target is only $49.48, and the shares closed trading on Wednesday at $38.61.
This stock not only offers safety but comes with an incredibly strong worldwide brand with 40% overseas sales. Coca-Cola Co. (NYSE: KO) is the world’s largest beverage company, refreshing consumers with more than 500 sparkling and still brands. It remains a top Buffet holding, as he owns a massive 400 million shares.
Led by Coca-Cola, one of America’s most trusted food and drink brands, the company’s portfolio features 20 billion-dollar brands including Diet Coke, Fanta, Sprite, Coca-Cola Zero, vitaminwater, Powerade, Minute Maid, Simply, Georgia and Del Valle. Globally, it is the number one provider of sparkling beverages, ready-to-drink coffees and juices and juice drinks.
Through the world’s largest beverage distribution system, consumers in more than 200 countries enjoy Coca-Cola beverages at a rate of more than 1.9 billion servings a day. Also remember that the company also owns 16.7% of Monster Beverage, which continues to deliver big numbers.
Shareholders receive a 3.31% dividend. Citigroup’s target price is $65, and Coca-Cola stock has a consensus target of $61.97. The closing share price on Wednesday was $56.12 a share.
This is one of the largest producers of alcoholic beverages in the world. Diageo PLC (NYSE: DEO) produces, markets and sells alcoholic beverages worldwide, including scotch whiskey, gin, vodka, rum, beer, Irish cream liqueurs, wine, Raki, tequila, Canadian and American whiskey, Cachaça and brandy, as well as adult beverages and ready to drink products. The company’s premium brands include Johnnie Walker, Smirnoff, Captain Morgan, Baileys, Tanqueray and Guinness.
Diageo’s reserve brands include Johnnie Walker Blue Label, Johnnie Walker Green Label, Johnnie Walker Gold Label 18-year-old, Johnnie Walker Gold Label Reserve, Johnnie Walker Platinum Label 18-year-old, John Walker & Sons Collection, Johnnie Walker The Gold Route, Johnnie Walker The Royal Route and other Johnnie Walker super-premium brands, as well as The Singleton, Cardhu, Talisker, Lagavulin and other malt brands.
Diageo stock comes with a 2.63% dividend. BofA Securities has set a $175 price target, just above the $174.53 consensus target. On Wednesday, shares closed at $153.94.
This broker-dealer is a newer holding for Buffett and is a very solid idea for those looking for financials other than money center banks. Jefferies Financial Group Inc. (NYSE: JEF) engages in the investment banking and capital markets and in asset management businesses in the Americas, Europe, Asia and elsewhere.
The company operates via its Investment Banking and Capital Markets, Asset Management, Merchant Banking, and Corporate segments. It provides investment banking, advisory services with respect to mergers or acquisitions, restructurings or recapitalizations and private capital advisory transactions, as well as equity and debt underwriting and corporate lending.
Jefferies also offers financing, securities lending, and other prime brokerage services; equities research and finance; and wealth management services. It provides clients with sales and trading of:
- Investment-grade corporate bonds
- U.S. and European government and agency securities
- Municipal bonds
- Mortgage-backed and asset-backed securities
- Leveraged loans
- Consumer loans
- High-yield and distressed securities
- Emerging markets debt, interest rate, and credit derivative products
- Foreign exchange trade execution and securitization.
It manages, invests in and provides services to a diverse group of alternative asset management platforms across a spectrum of investment strategies and asset classes.
The dividend yield here is 3.68%. The $43 Oppenheimer target price compares with a consensus target of $40.67. Jefferies Financial stock closed at $32.15 on Wednesday.
Even in bad times, everybody has to eat, and Kraft Heinz Co. (NASDAQ: KHC) always stands to benefit. The company was formed almost eight years ago in the merger of H.J. Heinz and Kraft Foods. The company is a leading global food company, with $25 billion in annual revenues generated by such well-known brands as Kraft, Heinz, Oscar Meyer and Maxwell House. It is also one of America’s most trusted food and drink brands.
The company is the third largest food and beverage manufacturer in North America. It derives 76% of revenues from that market and 24% from overseas. The company’s other brands include ABC, Capri Sun, Classico, Jell-O, Kool-Aid, Lunchables, Ore-Ida, Oscar Mayer, Philadelphia, Planters, Plasmon, Quero, Weight Watchers Smart Ones and Velveeta. Buffett holds a big position in the Berkshire Hathaway portfolio.
Kraft Heinz stock investors receive a 5.05% dividend. The BofA Securities price target of $40 is higher than the $36.45 consensus target and Wednesday’s close at $32.08.
This grocery chain giant is always a solid idea when the going gets rough as people tend to go out less. Kroger Co. (NYSE: KR) operates as a retailer in the United States. Its focus is on combination food and drug stores, multi-department stores, marketplace stores and price impact warehouses.
Kroger’s food and drug stores offer natural food and organic sections, pharmacies, general merchandise, pet centers, fresh seafood and organic produce. Its multi-department stores provide apparel, home fashion and furnishings, outdoor living, electronics, automotive products and toys.
Kroger’s marketplace stores offer full-service grocery, pharmacy, health and beauty care, and perishable goods, as well as general merchandise, including apparel, home goods, and toys. The price impact warehouse stores provide grocery and health and beauty care items, as well as meat, dairy, baked goods and fresh produce items.
The company also manufactures and processes food products for sale in its supermarkets and online. It even sells fuel through 1,613 fuel centers. As of January 29, 2022, it operated 2,726 supermarkets under various banner names in 35 states and the District of Columbia.
Shareholders receive a 2.66% dividend. Kroger stock has a $65 target price at BofA Securities. That is well above the consensus target of $50.37 and Wednesday’s close at $44.29.
Procter & Gamble
This company offers a very solid dividend and a host of recognizable products. Procter & Gamble Co. (NYSE: PG) is one of the world’s largest consumer products firms and one of the oldest companies in the Fortune 500. Its many brands include Pampers, Tide, Bounty, Charmin, Gillette, Oral B, Crest, Olay, Pantene, Head & Shoulders, Ariel, Gain, Always, Tampax, Downy and Dawn.
The company sells its products through mass merchandisers, e-commerce, grocery stores, membership club stores, drug stores, department stores, distributors, wholesalers, baby stores, specialty beauty stores, high-frequency stores and pharmacies. The company has been very innovative in its product development process. It uses that to help ensure future growth and cash flow. This should provide investors with years of steady growth and dividends.
The dividend yield is 2.51%. Wells Fargo’s price objective is $162. The consensus target is $155.36. On Wednesday, Procter & Gamble stock was last seen trading at $150.60.
While the market bounce back has been pleasant so far in 2023, the economy may be poised to roll over. At least two Fed rate hikes may still be on the way, in December and perhaps early next year. Some say the terminal rate could be as high as 5.75% to 6.00%. So, the lagging effect of the biggest hike in rates since the 1980s may well come back to haunt the stock market.
Originally published at 24/7 Wall St.
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