2 Top Buffett Stocks To Buy And Hold For The Long Haul
Many stock investing fundamentals remain the same regardless of the investor, but specific investments should be tailored to match your financial situation, risk tolerance, and time horizon. That said, there's nothing wrong with looking to investors whose financial situation is different from yours for stock investment motivation.
Many investors look to billionaire Warren Buffett for investment inspiration due to his personal success and the success of his company, Berkshire Hathaway. He is known for his buy-and-hold philosophy, so for investors looking to take this approach, here are two stocks to consider holding on to for the long haul.
1. Snowflake
Snowflake (NYSE: SNOW) is a data warehousing company that makes it easy for users to aggregate data from various platforms, analyze it, and use it however they see fit (such as training artificial intelligence (AI) models).
When Berkshire Hathaway invested in Snowflake in September 2020 during its initial public offering (IPO), many people were caught off guard, as Buffett historically avoids IPO stocks. It's been a rocky ride since then, too, with Snowflake's stock down around 35%.
Despite the roller-coaster ride for Snowflake investors so far, it's important to remember that investing is about the long game, and that's what Snowflake is focused on. Big data has become increasingly important as companies leverage it for business decisions, and it's only getting more important as AI continues to evolve and become more prominent.
Snowflake's platforms' effectiveness is reflected in its customer growth, particularly with Fortune 500 companies with large wallets. At the end of fiscal year 2024, Snowflake had 461 customers who spent at least $1 million annually with the company. Its net revenue retention was also 131%, meaning customers spent 31% more with it each year.
Although Snowflake's quarterly year-over-year revenue growth has been declining, its recent 32% YOY revenue growth is still respectable, and product revenue managed to outpace it, growing 36% from a year ago.
Snowflake is on the earlier end of what it can ultimately become, especially if AI is cemented as the next technological revolution, as many expect. Data has always been important in business, but the ability to process large volumes and extract relevant information -- which is what Snowflake allows -- is becoming more vital with time.
2. Apple
Apple (NASDAQ: AAPL) is decidedly Berkshire Hathaway's largest holding, accounting for nearly 40% of its stock portfolio. For a while, that worked out great in Berkshire Hathaway's favor, but Apple has underperformed many of its big tech peers and the broader market over the past year.
Despite a lagging stock price, Apple's long-term value remains strong. Concerns over slowing iPhone sales are warranted because it accounts for so much of Apple's revenue, but long-term investors shouldn't focus too much on that because much of that is a by-product of slowing sales in the smartphone market as a whole.
An encouraging sign is Apple's commitment to expanding its services and building an ecosystem that allows it to take advantage of the roughly 2 billion active iPhones worldwide. Specifically, Apple has been slowly but surely expanding into financial and health-related services, both of which have major growth opportunities with the advancement of fintech and health tech.
Between Apple Pay, Apple Card, Apple Pay Later, Apple Fitness+, and the many evolving health features on the Apple Watch, Apple has begun integrating itself more deeply into its users' lives. This smart long-term move will help keep customers in the Apple ecosystem for the long haul.
Products will continue to be Apple's bread and butter for the foreseeable future, but services boost much higher profit margins. In its latest quarter, the profit margins for Apple's services were around 74%, compared to 36% for its products. This has helped Apple's profit margins remain healthy despite slowing iPhone sales.
Apple became the tech giant we know today because of its innovative hardware products, but the next phase of the company's growth will rely on how it leverages this hardware to cement itself in different service industries. When you begin judging Apple that way, its long-term value becomes much more promising.
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Stefon Walters has positions in Apple. The Motley Fool has positions in and recommends Apple, Berkshire Hathaway, and Snowflake. The Motley Fool has a disclosure policy.
