Warren Buffett, also known as the “Oracle of Omaha,” is one of the most influential and successful investors of all time, with a net worth of $104.10 billion. He is the chairman and CEO of a diversified holding company, Berkshire Hathaway (BRK.A) (BRK.B). He primarily follows a long-term value investing strategy.
Buffett primarily invests in ably managed businesses with sound dividend records and pricing power. He has accumulated a fortune through his successful investment strategy, which has guided investors for decades.
Buffett’s Berkshire Hathaway has significantly outperformed the broader market. Over the past six months, BRK.B has returned 12.2%, outpacing the broader S&P 500 index’s 3.2% gains. Also, the stock has gained 2.8% over the past year versus the S&P 500’s 17.4% decline.
Despite the inflation showing signs of cooling, the Fed indicated to keep raising interest rates and predicted the terminal rate to reach as high as 5.1% next year, higher than the September projection of 4.6%. The Fed’s hawkish stance sparked recession fears recently. With the markets expected to witness heightened volatility in the upcoming months, investors should consider top Buffett’s holdings for solid returns over the long run.
To that end, it could be wise to buy fundamentally sound Warren Buffett stocks The Procter & Gamble Company (PG), AbbVie Inc. (ABBV), Biogen Inc. (BIIB), and The Kroger Co. (KR) and hold them into the next decade.
The Procter & Gamble Company (PG)
PG provides branded consumer packaged goods worldwide. The company operates through five segments: Beauty; Grooming; Health Care; Fabric & Home Care; and Baby, Feminine & Family Care. It sells its products primarily through mass merchandisers, grocery stores, drug stores, department stores, wholesalers, pharmacies, electronics stores, and professional channels.
Buffett’s Berkshire Hathaway held nearly 315,400 shares of PG as of March 31, 2022. The stock represents about 0.1% of Berkshire’s portfolio.
For the fiscal 2023 first quarter ended September 30, 2022, PG’s healthcare sales grew 3% year-over-year to $2.76 billion, while its net sales increased 1% year-over-year to $20.61 billion. As of September 30, 2022, the company’s current assets stood at $22.52 billion, compared to $21.65 billion as of June 30, 2022.
PG has raised its dividends for 66 consecutive years. It pays a $3.65 per share dividend annually, which translates to a 2.40% yield on the current price. Its four-year average dividend yield is 2.46%. Its dividend payments have grown at CAGRs of 6.9% and 5.7% over the past three and five years, respectively.
Analysts expect PG’s EPS and revenue for the fiscal year ending June 2024 to increase 7.3% and 3.6% year-over-year to $6.26 and $82.79 billion, respectively. Furthermore, the company has surpassed its consensus revenue in each of the trailing four quarters. The stock has gained 9.9% over the past six months to close the last trading session at $152.19.
PG’s POWR Ratings reflect solid prospects. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
PG has an A grade for Stability and a B for Sentiment and Quality. It is ranked #12 out of 58 stocks in the Consumer Goods industry. Click here to see the additional ratings of PG for Growth, Value, and Momentum.
AbbVie Inc. (ABBV)
ABBV is a research-based biopharmaceutical company that develops, manufactures, and sells pharmaceuticals worldwide. The company’s product offerings include HUMIRA, SKYRIZI, and RINVOQ. Buffett’s Berkshire Hathaway holds more than 163.5 million shares of CVX. This represents a nearly 8.4% stake in the company.
On December 6, ABBV and HotSpot Therapeutics, Inc., a biotechnology company, announced an exclusive collaboration and option to license agreement for HotSpot’s discovery-stage IRF5 program for the autoimmune disease treatment. The partnership with HotSpot will further strengthen its robust immunology pipeline.
On October 20, ABBV acquired DJS Antibodies Ltd, a privately held UK-based biotechnology company that discovers and develops antibody medicines targeting difficult-to-drug disease-causing proteins. This acquisition is expected to deliver new capabilities to enhance the company’s antibody research activities and strengthen its immunology portfolio.
On October 28, ABBV declared an increase in its quarterly dividend from $1.41 per share to $1.48 per share, reflecting an increase of approximately 5%, payable to shareholders on February 15, 2023. ABBV has raised its dividends for nine consecutive years.
“Based upon our performance and confidence in AbbVie’s long-term outlook, we are once again meaningfully raising our dividend,” added Chairman and CEO Richard A. Gonzalez.
The company’s annual dividend of $5.92 per share translates to a 3.63% yield on the current price. Its dividend payouts have grown at a CAGR of 9.6% and 17.3% over the past three years and five years, respectively. Its four-year average dividend yield is 4.63%.
ABBV’s net revenues increased 3.3% year-over-year to $14.81 billion in the fiscal third quarter ended September 30, 2022. The company’s operating income amounted to $4.60 billion, up 6.9% year-over-year. Its adjusted after-tax earnings increased 29.1% year-over-year to $6.53 billion. Also, its adjusted EPS grew 29.3% year-over-year to $3.66.
For the fiscal fourth quarter ending December 2022, analysts expect ABBV’s revenue to come in at $15.32 billion, indicating an increase of 2.9% year-over-year. The consensus EPS estimate of $3.66 for the current quarter indicates a 10.7% year-over-year increase. The company has surpassed the consensus EPS estimates in each of the trailing four quarters.
Furthermore, the company’s revenue and EPS for the current fiscal year are expected to grow 3.9% and 9% year-over-year to $58.30 billion and $13.84, respectively. Shares of ABBV have gained 10.7% over the past six months and 20.6% year-to-date to close the last trading session at $163.27.
ABBV’s POWR Ratings reflect its promising prospects. The stock has an overall A rating, equating to a Strong Buy in our POWR Ratings system.
ABBV has an A grade for Quality and a B for Growth. It is ranked #13 in the 159-stock Medical – Pharmaceuticals industry.
Beyond what has been stated above, we’ve also rated ABBV for Value, Momentum, Sentiment, and Stability. Click here to see all POWR Ratings of ABBV.
Biogen Inc. (BIIB)
BIIB discovers, develops, manufactures, and delivers therapies for treating neurological and neurodegenerative diseases.
On December 19, BIIB got into an agreement with Genentech, a Roche Group member, on the commercialization and sharing of economics for glofitamab. Glofitamab is an investigational CD20xCD3 T-cell engaging bispecific antibody being developed by Roche for the treatment of B-cell non-Hodgkin’s lymphomas. BIIB is expected to register substantial revenue growth with the sale of glofitamab.
In the third quarter that ended September 30, 2022, BIIB’s revenue from anti-CD20 therapeutic programs came in at $416.90 million, up marginally year-over-year. The company’s net income came in at $1.13 billion, up 244.7% year-over-year, while earnings per share attributable to BIIB rose 253.2% year-over-year to $7.84.
Analysts expect BIIB’s EPS to increase 3% year-over-year to $3.49 for the fourth quarter ending December 2022. The company’s EPS for the fiscal first quarter (ending March 2023) is expected to increase 9.6% year-over-year to $3.97. It has surpassed the consensus EPS estimates in three of four trailing quarters.
Over the past six months, the stock has gained 35.6% to close the last trading session at $280.61.
BIIB’s strong fundamentals are reflected in its POWR Ratings. The stock's overall A rating translates to a Strong Buy in our proprietary rating system.
BIIB has an A grade for Value, Sentiment, and Quality. In the Biotech industry, it is ranked #9 out of 379 stocks. Click here for the additional POWR Ratings for Growth, Momentum, and Stability for BIIB.
The Kroger Co. (KR)
KR is a leading retailer that operates combination food and drug stores, marketplace stores, multi-department stores, and price impact warehouses. The company operates more than 2,720 supermarkets under various names in 35 states and the District of Columbia. Buffett’s Berkshire Hathaway held more than 58 million shares of KR as of March 31, 2022. This represents a nearly 8% stake in the company.
On October 14, KR and Albertsons Companies, Inc. (ACI) entered a definitive agreement. This collaboration is expected to vastly expand customer reach while aiming to deliver fresh and affordable food to nearly 85 million households. It also strengthens KR’s value creation model to drive profitability and enhance shareholder returns.
For the fiscal third quarter of 2022, KR’s sales increased 7.3% year-over-year to $34.20 billion. Adjusted net earnings attributable to KR rose 9.2% from the prior-year quarter to $643 million. Its adjusted EPS came in at $0.88, up 12.8% from last year's period.
KR has paid dividends for 16 consecutive years. Its dividend payouts have increased at 16.1% CAGR for the past three years. Its current dividend yield is 2.30%, and its four-year average dividend yield is 1.97%.
The consensus EPS estimate of $4.13 for the fiscal year ending January 2023 indicates a 12.2 year-over-year increase. Likewise, analysts expect the company’s revenue for the ongoing year to improve by 7.6% from the prior year to $148.33 billion. Also, the company has topped the consensus EPS and revenue estimates in all the trailing four quarters.
Shares of KR have gained 4% over the past year to close the last trading session at $45.25.
KR’s solid fundamentals and strong outlook are reflected in its POWR Ratings. The stock has an overall A rating, which equates to a Strong Buy in our proprietary rating system.
It has a grade of B for Value and Quality. It is ranked #9 out of 39 stocks in the A-rated Grocery/Big Box Retailers industry. Click here for the additional ratings for Growth, Momentum, Sentiment, and Stability for KR.
PG shares were unchanged in premarket trading Friday. Year-to-date, PG has declined -4.65%, versus a -18.54% rise in the benchmark S&P 500 index during the same period.
About the Author: Mangeet Kaur Bouns
Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions.
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