These are the seven best-performing Buffett stocks.
Warren Buffett has had a rough year so far. Berkshire Hathaway (ticker: BRK.A, BRK.B) shares are down about 15% year to date, lagging the S&P 500’s slight drop. In addition, Buffett didn’t pull the trigger on any major buyouts during the market sell-off in March and seemingly unloaded his airline stocks near the market bottom. Most long-term Berkshire investors aren’t sweating the 2020 bumps in the road, given Buffett’s focus on the extremely long-term outlook, and plenty of Berkshire’s holdings have performed very well this year overall. Here are the seven best-performing Buffett stocks of 2020.
Year after year, Berkshire investors had watched the Amazon growth story unfold from the sidelines. Berkshire finally invested in Amazon for the first time in 2019, and it didn’t take long for the investment to pay off in a major way. Amazon’s e-commerce and cloud services businesses are perfectly adapted for the social distancing environment. In fact, Amazon’s stock is up about 65% year to date, nearly doubling the return of any of Berkshire’s other public investments. Berkshire owned 533,300 shares of Amazon, worth $1.60 billion at the end of the first quarter.
RH is a high-end home furnishings company that sells furniture, lighting, textiles and other products. Given its position at the luxury end of the price scale, RH is one of the few retailers that has managed to keep expanding its margins in 2020 despite the extremely difficult environment. RH shares jumped 17% in early June when the company released a shareholder letter informing investors that the company is positioned to emerge from the downturn more profitable than ever because of aggressive cost-cutting measures. Berkshire holds 1.7 million shares of RH stock, which is up about 35% year to date.
Mega-cap tech giant Apple has kept chugging along in 2020 despite the pandemic. Apple shares have gained about 28% year to date in anticipation of fall’s rollout of the 5G iPhones. Buffett first bought Apple in 2016 and has about 245 million shares worth more than $95 billion. Not only is Apple Berkshire’s largest stock investment, but its Apple stake is also four times the size of any other holding by value. Buffet has now reportedly earned a $60 billion return on his Apple stake since he started buying.
Moody’s Corp. (MCO)
Moody’s is a credit ratings agency that provides investment research, tools and analysis. The economic chaos in 2020 has been a tailwind for Moody’s. Bond yields have plummeted this year, and companies have been aggressively issuing debt to shore up their balance sheets and improve their liquidity to ride out the storm. The more debt floods the market, the more important Moody’s credit rating services become. In addition, the company’s research analytics business has provided strong revenue growth. Moody’s shares are up about 20% year to date, and the stock has been a winner for Buffett over the last two decades.
Kroger Co. (KR)
Grocery stores have been essential businesses throughout the economic shutdown, and Kroger’s first-quarter numbers confirmed the company’s 2020 strength. Kroger reported 19% same-store sales growth (excluding fuel) and 92% digital sales growth last quarter. More Americans are eating at home for the time being, which should continue to drive grocery demand. Kroger’s low prices and heavy use of rewards, promotions and coupons have also boosted sales. Buffett first bought Kroger in late 2019. Berkshire now holds 18.94 million shares of Kroger stock, worth about $657.4 million after about a 20% gain this year.
Teva Pharmaceutical Industries (TEVA)
After years of extreme underperformance, shares of drugmaker Teva Pharmaceutical Industries have come alive in 2020, gaining more than 17%. Teva has had a long list of problems in recent years, including losing exclusivity on its leading drug Copaxone and enduring negative headlines and legal risks associated with ties to the opioid crisis. However, Teva has reduced its net debt by nearly $10 billion in the last few years by selling noncore assets and responsibly committing operating cash flow to shoring up the balance sheet. Berkshire holds 42.78 million Teva shares worth about $491.6 million.
DaVita operates about 2,700 U.S. dialysis outpatient clinics. Life-saving dialysis is about as essential as a business can get, and DaVita’s revenue and share price performance have reflected that recession-proof nature in 2020. DaVita reported $2.84 billion in revenue in the first quarter, up from $2.74 billion in the same quarter a year ago. Berkshire owns 38 million shares of DaVita stock worth about $3.32 billion. Berkshire’s stake represents a 31.3% ownership of DaVita, a higher percentage than any other Buffett stock on this list. DaVita shares are up 16.3% this year.
Buffett stocks that are performing well:
— Amazon (AMZN)
— RH (RH)
— Apple (AAPL)
— Moody’s Corp. (MCO)
— Kroger Co. (KR)
— Teva Pharmaceutical Industries (TEVA)
— DaVita (DVA)
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7 Best-Performing Warren Buffett Stocks to Buy in 2020 originally appeared on usnews.com