Warren Buffett is one of the 21st centuries’ most popular and successful institutional investors. Buffett’s value investing strategy has worked out in his favor handsomely, making him the world’s sixth richest person. Buffett’s Berkshire Hathaway (BRK.A) wiped away pandemic losses to deliver record earnings in the second quarter.
Buffet currently holds a significant stake in Apple Inc. (AAPL), The Coca-Cola Company (KO), Marsh & McLennan Companies, Inc. (MMC), and The Kroger Co. (KR). Buffett’s stake in AAPL was valued at a record $139 billion last week. Thus, the investor has more than quadrupled his money on AAPL. As of June 30, he held 400 million shares of KO worth $21.64 billion. Also, his portfolio includes $590.39 million worth of MMC stock. In addition, Buffett is invested in consumer stock KR, holding 61.79 million shares.
Backed by strong financial performance in the most recent quarter and these companies’ significant market shares, we think investors should take advantage of their current price dips and consider investing in these stocks.
Apple Inc. (AAPL)
Technology giant AAPL needs no introduction. The company specializes in consumer electronics, computer software, and online services. AAPL has also been the world’s most valuable company since January 2021.
On September 1, AAPL previewed Apple Changsha, the first Apple Store in Hunan province. The location provides easy access for customers across central China. The move demonstrates AAPL’s expansionary policy, which should support its continued growth.
On August 30, AAPL announced the acquisition of Primephonic, the renowned classical music streaming service. Given the popularity of Primephonic, this should prove to be a great addition to AAPL’s offerings.
For its fiscal third quarter, ending June 26, AAPL reported revenue of $81.43 billion, up 36.4% year-over-year. This marks a new June quarterly revenue record. The company’s services revenue increased 32.9% year-over-year to a $17.49 billion all-time high Its net income grew 93.2% from its year-ago value to $21.74 billion. Its EPS has increased 100% year-over-year to $1.30.
A $84.90 billion consensus revenue estimate for the fiscal fourth quarter (ending September 2021) indicates a 31.2% increase year-over-year. The Street expects the company’s EPS to rise 68.5% from the prior-year quarter to $1.23 in the current quarter. AAPL has an impressive earnings surprise history; it beat the consensus EPS estimates in each of the trailing four quarters.
AAPL has gained 23.6% in price over the past six months to close yesterday’s trading session at $149.55. The stock has gained 33.5% over the past year; however, it has slumped 3.1% in price over the past five days.
AAPL’s promising outlook is reflected in its POWR Ratings. AAPL has an overall B rating, which equates to Buy in our proprietary POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
AAPL has an A grade for Sentiment, and a B grade for Quality. Of the 46 stocks in the B-rated Technology – Hardware, AAPL is ranked #21.
Click here to view additional AAPL ratings for Growth, Momentum, Value, and Stability.
The Coca-Cola Company (KO)
KO manufactures, markets, and sells various non-alcoholic beverages worldwide. The company provides sparkling soft drinks, water, enhanced water, sports drinks, juice, dairy, plant-based beverages, tea and coffee, and energy drinks.
On July 14, KO declared a 42-cent dividend per common share. The dividend is payable October 1, 2021, to shareowners of record of the company as of the close of business on September 15, 2021.
KO’s net operating revenues increased 42% year-over-year to $10.13 billion in its fiscal second quarter, ended July 2. The revenue growth can be attributed to the ongoing recovery in markets where coronavirus-related uncertainty is abating. Its gross profit grew 53% from its year-ago value to $6.34 billion, while its operating income improved 52% year-over-year to $3.02 billion. The company’s EPS increased 48% year-over-year to $0.61.
Analysts expect KO’s revenues to increase 13.4% year-over-year to $9.80 billion in the current quarter, ending September 2021. A $0.58 consensus EPS estimate for the current quarter indicates a 5.5% rise from the same period last year. In addition, KO surpassed the Street’s EPS estimates in each of the trailing four quarters.
Over the past six months, KO has gained 11.3% in price to close yesterday’s trading session at $56.07. KO has shed 2% over the past month.
It is no surprise that KO has an overall B rating, which equates to Buy in our proprietary POWR Ratings system. The stock also has a B grade for Growth, Stability, Sentiment, and Quality. Among the 38 stocks in the B-rated Beverages industry, KO is ranked #11.
To see additional KO ratings for Value and Momentum, click here.
Marsh & McLennan Companies, Inc. (MMC)
MMC is a professional services company that provides advice and solutions to clients in the areas of risk, strategy, and people worldwide. It operates in two segments: Risk and Insurance Services; and Consulting.
On September 2, Marsh McLennan Agency, MMC’s middle market agency subsidiary, announced the acquisition of Vaaler Insurance, Inc., one of the largest independent agencies in North Dakota. This should provide the company added resources and solutions to better serve its clients.
MMC’s revenue increased 19.8% year-over-year to $5.02 billion in its fiscal second quarter, ended June 30. Its operating income stood at $1.23 billion, up 38.8% from the same period last year. Its net income increased 43.4% from its year-ago value to $820 million. The company’s EPS increased 42.9% year-over-year to $1.60.
A $4.43 billion consensus revenue estimate for the fiscal third quarter, ending September 2021 indicates a 15.5% increase year-over-year. The Street expects the company’s EPS to rise 20.7% from the prior-year quarter to $0.99 in the current quarter. In addition, MMC beat the consensus EPS estimates in each of the trailing four quarters.
MMC has gained 37.5% in price over the past year to close yesterday’s trading session at $159.14. However, the stock has slumped marginally intraday.
The stock has an overall B rating, translating to Buy in our proprietary POWR Ratings system. MMC also has a B grade for Growth and Stability. It is ranked #1 among the 14 stocks in the Insurance – Brokers industry.
Get additional MMC ratings for Momentum, Sentiment, Quality, and Value, here.
The Kroger Co. (KR)
KR operates as a retailer in the United States. The company operates combination food and drug stores, multi-department stores, marketplace stores, and price impact warehouses.
On August 4, KR and Kitchen United partnered to offer customers freshly prepared, on-demand restaurant food. “As we continue to define Kroger as a food destination, this collaboration creates another seamless way for our customers to order lunch or dinner for pick up while they shop for groceries or for delivery to their location of choice,” said Craig Gauden, Kroger’s director of partnership development.
On July 2, KR and KNAPP, a global leader in intelligent automation and specialized software solutions, announced their agreement to deploy, expand, and enhance the capabilities and capacity of KR’s existing Great Lakes Distribution Center in Delaware, Ohio. Through this agreement, the company expects to transform its supply chain network while delivering innovation and scalability.
KR’s sales increased 3.9% year-over-year to $31.68 billion in its fiscal second quarter, ended August 14. Its operating profit grew 2.3% from its year-ago value to $839 million. KR’s adjusted net income came in at $610 million, indicating a 5% rise year-over-year. The company’s adjusted EPS increased 9.6% year-over-year to $0.80.
The Street expects KR’s revenues to rise 1.4% year-over-year to $136.64 billion in the next year. A $3.07 consensus EPS estimate for the same period indicates a marginal improvement year-over-year. Moreover, the company’s EPS is expected to increase 11.9% per annum over the next five years.
Shares of KR have gained 24.8% in price over the past year and 35% year-to-date. However, it has slumped 8.1% over the past five days.
KR has an overall B rating, which equates to Buy in our POWR Ratings system. KR also has a grade of B Value and Quality. The stock is ranked #18 of 41 in the A-rated Grocery/Big Box Retailers industry.
Beyond what we’ve stated above, we have also rated KR for Growth, Momentum, Sentiment, and Stability. Click here to view all KR ratings.
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AAPL shares were trading at $148.99 per share on Tuesday afternoon, down $0.56 (-0.37%). Year-to-date, AAPL has gained 12.81%, versus a 19.86% rise in the benchmark S&P 500 index during the same period.
About the Author: Subhasree Kar
Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a Master’s degree in Economics, she gained knowledge of equity research and portfolio management at Finlatics. More...
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