“You can’t have a child in a month by impregnating nine women”: Buffett says the key to investing is emotional control – not great talent or effort. 3 “forever” stocks for the long term
Warren Buffett’s wealth wasn’t built overnight.
Instead, the Oracle of Omaha has steadily and gradually accumulated over several decades. He is the undisputed advocate of long-term investing. “No matter how great the talent or the effort, some things just take time,” he once said. “You can’t give birth to a child in a month by getting nine women pregnant.”
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That’s good advice. Building wealth through investments is certainly possible, but only if the investor is patient, disciplined and committed to long-term thinking. The final ingredient is a stock that can withstand market cycles and deliver stable returns over the long term.
With that in mind, here are the top three forever stocks you may want to add to your Patient Capital watchlist.
Kraft Heinz
Kraft Heinz Corporation is only eight years old, but the two brands that make it up have each been around for more than a century. Kraft Foods Inc. was incorporated in 1909 while HJ Heinz Co. was incorporated in 1869. Both brands have steadily expanded their presence around the world over the past few decades.
In some parts of the world, these brands are synonymous with cheese, ketchup, and macaroni. That kind of brand recognition takes forever to build, which is why the combined company has so much underlying value.
Today, the company (NASDAQ:KHC) is worth more than $41 billion and the stock trades at about 17 times earnings — reasonable for a low-growth consumer brand.
Buffett’s company, Berkshire Hathaway (NYSE:BKR.B), first acquired a stake in Heinz in 2013. Two years later, the company committed $5 billion as part of the mega-merger that brought together the two household brands. The combined company is currently Berkshire’s seventh-largest holding.
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Coke
Coca-Cola (NYSE:KO) is another iconic brand from the 19th century. The company was founded in 1892 and has been part of Buffett’s portfolio for several decades. He first opened a position at the beverage giant in 1988. Since then, the stock has risen more than 2,500%.
The company is now worth over $260 billion, while the stock trades at a price-to-earnings ratio of around 25. KO – the company’s ticker symbol – also offers a 3% dividend yield, making it an ideal income target for investors like Buffett.
Buffett currently owns 400 million KO shares worth $24 billion. It is the fourth largest position in his portfolio, which is a testament to his long-term commitment to this brand. Private investors should definitely take a closer look at this blue chip.
American Express
American Express (NYSE:AXP) is 173 years old, making it the oldest company on this list. The company was founded in 1850 as an express mail company in Buffalo, New York. Of course, it is now one of the largest payment networks in the world, with more than $214.5 billion flowing through the network last year.
Amex receives a small share of every transaction. Buffett now owns a large part of the company. His stake in Amex is worth over $26 billion, making it his third-largest holding.
This “forever” stock is currently trading at just over 16 times earnings and should definitely be on your list.
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This article is for informational purposes only and should not be construed as advice. The provision is made without any guarantee.