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74% of Warren Buffett’s portfolio is invested in these 5 stocks

Warren Buffett at a Berkshire Hathaway AGM
Warren Buffett at a Berkshire Hathaway AGM

Recently, I was taking a look at Warren Buffett’s stock portfolio. And one thing jumped out at me – over 70% of his portfolio is invested in just five stocks.

Here, I’m going to highlight those five stocks Buffett is betting big on. I’ll also discuss whether I’d buy these shares for my own portfolio today.

Apple

Buffett’s largest holding is currently technology giant Apple (NASDAQ: AAPL). At 30 June, he held 915.23m Apple shares, worth about $137bn at today’s share price.

This is a stock I already own. And it’s one of my largest positions. So it’s fair to say I’m quite bullish on it.

Would I buy the stock today though?

Well, I would if I didn’t already have such a large position. To my mind, Apple’s P/E ratio of 22 is quite reasonable, given its brand power, ecosystem, growth prospects (healthcare and electronic payments), and strong balance sheet.

Risks to consider with Apple include supply chain disruptions from China and weaker consumer spending globally. Overall however, I see the long-term risk/reward skew as attractive.

Bank of America

Buffett’s second-largest holding is Bank of America. He held 1.03m shares at 30 June, worth around $39.7bn at today’s share price.

While Buffett is clearly bullish here, this is not a stock I’d buy for my own portfolio. One reason is that banks are extremely cyclical. If the economy goes downhill, bank profits tend to follow. Another reason is that big banks tend to have very complex balance sheets, so it’s hard to assess risks.

It’s worth pointing out that this stock is quite cheap right now. However, that doesn’t change my view. There are other stocks that are better fit for my portfolio.

Chevron

Oil giant Chevron is Buffett’s third-largest holding. At 30 June, he owned 163.5m shares, worth $30.5bn at today’s share price.

This is another Buffett stock I’d pass on. Chevron is doing well at the moment due to high oil prices. This is reflected in its share price. However, in the long run, the company could face structural challenges as the world transitions to renewable energy. So this stock is not for me.

Coca-Cola

His fourth-largest holding is Coca-Cola. At 30 June, he owned 400m shares, worth around $24.5bn at today’s share price.

This is a stock I would certainly consider for my own portfolio. It has strong brands, a good long-term track record in terms of profitability, and pays a decent dividend. Overall, there’s a lot to like.

My only issue with Coca-Cola is that it looks a little expensive right now. Currently, the P/E ratio is 24. I would prefer to buy the stock at a lower valuation to ensure a margin of safety.

American Express

Finally, there’s American Express. Buffett owned 151.6m shares at 30 June, worth about $23.5bn today.

I can see both a bull and a bear case here right now. On the bullish side, the company looks set to benefit from higher interest rates and increased travel spending. On the bearish side however, it could experience higher loan losses due to weaker economic conditions.

Given the credit risk, I’d probably buy Visa or Mastercard (both also held by Buffett) over American Express right now. Unlike Amex, these companies don’t face credit risk as they simply operate payments networks.

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Ed Sheldon has positions in Apple, Mastercard, and Visa. The Motley Fool UK has recommended Apple and Mastercard. Bank of America is an advertising partner of The Ascent, a Motley Fool company. American Express is an advertising partner of The Ascent, a Motley Fool company.  Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Motley Fool UK 2022