Warren Buffett, one of the greatest investors of all time, has built his fortune by selecting businesses with long-term value and strong fundamentals. Through his company, Berkshire Hathaway (BRK.A) (BRK.B), Buffett has invested in a diverse range of businesses across industries. If you have $1,000 to invest and are looking to follow in Buffett’s footsteps, consider three of his favorite stocks that offer excellent growth potential and can be held for the long term.
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These three stocks are relatively inexpensive, making them accessible for smaller portfolios, but they have the potential to deliver strong returns over the next two decades.
1. Coca-Cola (KO)
Coca-Cola has been a cornerstone of Buffett’s portfolio for decades. First purchased by Berkshire Hathaway in 1988, Coca-Cola remains one of Buffett’s most recognizable and beloved holdings. As a global leader in the beverage industry, Coca-Cola’s vast product lineup includes not only soda but also bottled water, teas, and sports drinks, making it a diversified player in the non-alcoholic beverage market.
One of the key reasons Buffett loves Coca-Cola is its strong brand loyalty and global reach. Coca-Cola has proven its resilience through economic downturns and changing consumer preferences. It continues to innovate, launching new products to cater to health-conscious consumers while maintaining its dominance in the soda category.
For investors, Coca-Cola offers stability and income. It has increased its dividend for more than 60 consecutive years, making it a reliable choice for those seeking both growth and income over the long term. Trading around $70 per share, you could buy several shares with $1,000.
2. Bank of America (BAC)
Bank of America stands out as one of the largest financial institutions in the world. Berkshire Hathaway remains the largest shareholder of Bank of America, with an 11.1% stake in the company.
Given its large operating history, Bank of America has navigated financial crises, interest rate fluctuations, and regulatory changes while maintaining its position as a key player in the global financial system. What makes Bank of America appealing is its efficient management and robust balance sheet. The company consistently delivers solid earnings and has focused on rewarding shareholders through dividends and share buybacks. Bank of America’s current dividend yield is around 2.5%, making it a good option for income investors.
At approximately $40 per share, you could buy a sizable position with $1,000 and potentially benefit from both capital appreciation and dividend growth over the next 20 years. Buffett has shown unwavering confidence in the bank’s long-term prospects, making it a worthy candidate for your portfolio.
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3. Kraft Heinz (KHC)
Kraft Heinz is a staple in Buffett’s portfolio. As one of the largest food and beverage companies in the world, Kraft Heinz boasts a portfolio of well-known brands like Heinz ketchup, Kraft macaroni & cheese, and Oscar Mayer meats.
Despite past operational struggles, Kraft Heinz has made efforts to reposition itself, focusing on innovation and cost efficiencies. The company’s ability to adapt to a changing market while maintaining its position as a leading consumer staples company is one of the reasons Buffett has continued to back it.
With a stock price of around $35 per share, Kraft Heinz offers a compelling value proposition for investors with a long-term view. Consumer staples companies tend to be more resilient during economic downturns. With an improved focus on efficiency and product innovation, Kraft Heinz could see steady growth over the coming years.
The Bottom Line
Warren Buffett’s investment strategy focuses on buying quality businesses at reasonable prices and holding them for the long term. These three stocks — Coca-Cola, Bank of America, and Kraft Heinz — embody that philosophy. With a combined $1,000 investment, you can own a piece of each of these companies and potentially benefit from decades of growth and income.
On the date of publication, Caleb Naysmith did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
