Warren Buffett’s new 13F is out – and he’s counting on these 3 big stocks to fight soaring inflation

news7f11/17/2022

1 3 minutes read

Warren Buffett's new 13F is out - and he's counting on these 3 big stocks to fight soaring inflation

Prices are going up. In October, US consumer prices rose 7.7% from a year ago — down from 9.1% in June but still at a worryingly high level.

Soaring inflation has serious consequences for your cash savings.

Luckily, investing legend Warren Buffett has plenty of advice on what to own when consumer prices skyrocket.

In a 1981 letter to shareholders, Buffett highlighted two business characteristics that investors should look for when trying to combat inflation: 1) the ability to easily appreciate and 2) the ability to take on more business without overspending.

Here are four stocks Berkshire holds for the most part boasting of those traits.

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American Express (AXP)

Last year, American Express showed off its pricing power when it increased the annual fee on the Platinum Card from $550 to $695.

The company also directly benefits from the inflationary environment.

American Express makes most of its money through discount fees — merchants are charged a percentage of each Amex card transaction. As the prices of goods and services go up, the company cuts larger bills.

Business is booming. In the third quarter, the company’s revenue grew 24% year-over-year to $13.6 billion.

American Express is the fifth largest stake in Berkshire Hathaway. Owning 151.6 million AXP shares, Berkshire’s stake is worth about $23.2 billion.

Berkshire also owns shares of American Express competitors Visa and Mastercard, although the positions are much smaller.

American Express stock currently has a dividend yield of 1.4%.

Coca-Cola (KO)

Coca-Cola is a classic example of a business that weathered a recession. Whether the economy is booming or struggling, almost anyone can afford a Coke.

Its strong market position, large scale and portfolio of iconic brands — including the likes of Sprite, Fresca, Dasani and Smartwater — give the company plenty of pricing power. .

Add to that a solid geographical diversification — its products are sold in more than 200 countries and territories around the globe — and it’s clear that Coca-Cola can grow sustainably. After all, the company went public over 100 years ago.

Buffett has held Coca-Cola in his portfolio since the late 80s. Today, Berkshire owns 400 million shares of the company, worth about $24.1 billion.

You could lock in a 2.9% dividend yield on Coca-Cola stock at the current price.

Apples (AAPL)

No one spending $1,600 on a fully equipped iPhone 14 Pro Max would call it stealing. But consumers still prefer to splurge on Apple products.

Earlier this year, management revealed that the company’s actively installed hardware base had surpassed 1.8 billion devices.

While competitors offer cheaper devices, millions of users don’t want to live outside the Apple ecosystem. The ecosystem acts as an economic moat, allowing the company to earn outstanding profits.

It also means like Inflation spikedApple can pass on higher costs to its global consumer base without worrying too much about falling sales.

Today, Apple is Buffett’s largest publicly traded stock, accounting for nearly 40% of Berkshire’s portfolio by market value. Of course, the sheer rise of Apple’s stock price is one of the reasons for that concentration. Over the past five years, the tech giant’s stock has surged more than 250%.

Apple currently offers a dividend yield of 0.6%.

Letter V (CVX)

One of Buffett’s big moves in 2022 is buying Chevron. According to SEC filings, Berkshire owned the energy giant’s $23.8 billion as of September 30 — a significant jump from its $4.5 billion stake at the end of 2021. .

Today, Chevron represents the third-largest public stake in Berkshire.

It’s not hard to see why. Although the oil business is capital intensive, it tends to doing very well in times of high inflation.

Oil – the most traded commodity globally – is up 16% year-to-date. And the supply shock caused by Russia’s invasion of Ukraine could continue that trend.

Strong oil prices benefit oil producers. Chevron’s latest quarterly earnings are up 84% year over year. The stock is up more than 50% in 2022.

The company also returns cash to investors. Paying a quarterly dividend of $1.42 per share, Chevron has an annual yield of 3.0%.