Key Points

• Buffett is a major shareholder of Coca-Cola, enjoying its dividends.
• Credit cards, like Capital One and American Express, are favorites as cash usage declines.
• Buffett sees value in Apple, despite his usual aversion to technology stocks.

1. Kroger

Kroger (KR) operates 2,750 grocery stores across the United States. It is the country’s second-largest grocer, and its vertically integrated model, featuring private-label goods and in-house production, sets it apart.

About one-fifth of Kroger’s revenue comes from sales of house brands, resulting in higher profit margins and shorter supply chains. The company’s strong online presence on Kroger.com further boosts its business.

2. Capital One

Capital One Financial (COF) is a misunderstood credit card company that caters to a niche consumer market while avoiding unnecessary risks. The company has consistently grown its tangible book value at about 14% per year since going public in 1994.

Buffett invested in Capital One during the first quarter of this year, making it an attractive pick for investors.

3. American Express

American Express (AXP) differs from Capital One in its focus on fee-based charge cards that offer cardholder perks. The American Express Platinum Card, for instance, provides various benefits that can easily offset the annual fee for frequent users.

Buffett’s Berkshire has held a stake in American Express since 1991, highlighting its long-term potential.

4. Coca-Cola

Buffett’s famous mantra “Buy what you know” is exemplified by his massive stake in Coca-Cola (KO). The company’s value stocks and consistent dividends appeal to Buffett’s investment philosophy. Coca-Cola has increased its payout every year for the past 61 years.

The company’s strong brand presence, encompassing various labels like Dasani, Fanta, and Minute Maid, ensures universal marketability.

5. Apple

Despite his general aversion to technology stocks, Buffett recognizes the unique position of Apple (AAPL). It operates more like a consumer services company that leverages technology to deliver its services. With high-margin digital services contributing significantly to its revenue, Apple stands out from traditional tech companies.

Apple’s popular iPhone, coupled with its digital ecosystem, continues to attract users worldwide. Berkshire Hathaway’s significant investment in Apple underscores its long-term potential.

Remember, these five stocks have been carefully selected based on Warren Buffett’s investment philosophy. Investing in them and holding for the long term could yield substantial rewards.