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Warren Buffett's Berkshire Hathaway is renowned for its extensive and influential stock portfolio. Despite recent high-profile sales of stocks such as Apple, Bank of America, and HP, leading to record cash reserves, Berkshire Hathaway continues to maintain significant positions in several key value stocksThis article explores three notable value stock: Coca-Cola, American Express, and Ulta Beauty, highlighting their roles within the portfolio.
Coca-Cola (NYSE:KO)
Coca-Cola has been a cornerstone of Berkshire Hathaway’s portfolio since 1988Currently, Berkshire holds approximately 400 million shares of Coca-Cola, representing a 9.3% stake in the company and accounting for 9.2% of its total portfolioCoca-Cola's diverse product range includes not only its flagship soda but also teas, fruit juices, sports drinks, bottled water, coffee, and alcoholic beveragesThis diversification has helped the company weather various economic downturns over the decades.
The company's dividend history is notable, with Coca-Cola raising its dividend annually for 62 consecutive yearsThe stock offers a forward yield of 2.7%Despite facing challenges during the pandemic, Coca-Cola has demonstrated resilience, with expectations of a 9% to 10% rise in organic sales for the current yearAnalysts predict steady growth for Coca-Cola, with reported sales and earnings per share (EPS) expected to increase at compound annual growth rates (CAGRs) of 4% and 9%, respectively, through 2026.
American Express (NYSE:AXP)
American Express has been a significant part of Berkshire Hathaway's portfolio since 1998Berkshire holds 151.6 million shares of American Express, giving it an 11% stake in the company, which makes up 12.7% of its overall portfolioAmerican Express differs from other payment processors like Visa and Mastercard by functioning as both a bank and card issuer, allowing it to generate revenue through interest on loans as well as transaction fees.
The company's focus on higher-income customers and its gradual expansion into international markets contribute to its stabilityAnalysts forecast American Express's revenue and EPS to grow at CAGRs of 9% and 15%, respectively, from 2023 to 2026The stock is valued at 17 times forward earnings and offers a forward dividend yield of 1.1%.
Ulta Beauty (NASDAQ:ULTA)
Ulta Beauty is a more recent addition to Berkshire Hathaway's portfolio, with the company acquiring 690,106 shares in the second quarter of 2024This position represents 1.5% of Ulta's shares and 0.1% of Berkshire's portfolioUlta Beauty, which went public seven years ago, has grown by expanding standalone stores, partnering with new brands, and targeting younger consumers through social media and a loyalty program with 43.9 million members.
Recent stock performance has been impacted by concerns over slowing comparable sales growth, higher promotional activities, and rising expensesFor the full year, revenue is expected to remain nearly flat, with a decline in EPS by 11%However, from 2023 to 2026, revenue and EPS are projected to grow at a CAGR of 3% as market conditions stabilizeThe stock is currently valued at 16 times forward earnings and has announced a $2 billion buyback plan, representing over 11% of its market capitalization.
