Renowned institutional investor Warren Buffett is a major buy-and-hold investor who believes in hanging on to stocks for the long term. The top Buffett stocks are dividend payers with solid financials. As the CEO of Berkshire Hathaway (BRK.A) (BRK.B), Buffett invests primarily in stocks in sync with his focus on pricing power, management quality, and long-term growth.
Despite the recent geopolitical shocks and the economy proceeding toward recession, Buffett’s investments are expected to prosper over the long term. Furthermore, Wall Street and most investors tend to track buys and sells closely. In the first quarter of 2022, inflation was a clear driver of various Buffett investments. Berkshire Hathaway ramped up its stock purchases and spent a net $41.5 billion on equities. Buffett’s recent buys are concentrated in financial, commercial, and industrial holdings.
Given these factors, we think it could be wise to add fundamentally sound Warren Buffett stocks Coca-Cola Company (KO) and ITOCHU Corporation (ITOCY) to one’s portfolio now.
The Coca-Cola Company (KO)
Atlanta, Ga.-based manufactures, markets, and sells a wide variety of nonalcoholic beverages worldwide. The company offers sparkling soft drinks, flavored and enhanced water, juice, dairy and plant-based beverages, tea and coffee, beverage concentrates and syrups, and energy drinks. KO operates through a network of independent bottling partners, wholesalers, distributors, retailers, and bottling distribution operators.
On April 27, KO declared a 44 cents per common share dividend. The dividend is payable on July 1 to shareowners. Earlier in 2022, KO’s board of directors approved an increase in the company’s 60th consecutive annual dividend and raised its quarterly dividend by 4.5%, to 44 cents from 42 cents.
In its fiscal 2022 first quarter, ended April 1, 2022, KO's non-GAAP net operating revenues grew 16.4% year-over-year to $10.50 billion, while its non-GAAP gross profit improved 14.8% from its year-ago value to $6.27 billion. The company's non-GAAP income before income taxes increased 17.1% year-over-year to $3.49 billion. Its non-GAAP net income and non-GAAP net income per share came in at $2.80 billion and $0.64, respectively, registering an increase of 16.6% and 16.4% from the prior-year period.
The $10.14 billion consensus revenue for its fiscal year 2022 fourth quarter, ending Dec. 31, 2022, represents a 7.1% increase from the prior-year period. The $0.49 consensus EPS estimate for the current quarter indicates an 8.4% year-over-year rise. Furthermore, it has surpassed the consensus revenue and EPS estimates in each of the trailing four quarters.
The stock has gained 9% in price year-to-date and 19.4% over the past year. It closed yesterday's trading session at $64.51.
KO's POWR Ratings reflect this promising outlook. It has an overall B grade, which equates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
KO has a B grade for Sentiment, Stability, and Quality. Within the A-rated Beverages industry, it is ranked #15 of 36 stocks. To see additional POWR Ratings (Value, Momentum, and Growth) for KO, click here.
ITOCHU Corporation (ITOCY)
Headquartered in Tokyo, Japan, ITOCY trades, imports, and exports various products worldwide. The company operates through seven business segments: Textile; Machinery; Metals & Minerals; Energy & Chemicals; Food; General Products & Realty; and ICT & Financial Business. It produces and sells garment materials, imports lifestyle brands, and provides engineering and construction services. ITOCY trades in iron ore, coal, steel, other metals, crude oil, petroleum products, and others. In addition, it provides IT and internet-related services.
In January, ITOCY announced that its board of directors had approved the new share repurchase program. ITOCY will repurchase its shares to execute the flexible capital strategy. Under the share repurchase program, the number of shares to be repurchased will total up to 20,000,000 and amount to up to JPY 60 billion from the period of January 20 to March 31. With this program , the company might create greater shareholder value.
ITOCY's revenues increased 18.6% year-over-year to $100.44 billion, while its gross trading profit rose 8.8% year-over-year to $15.83 billion in its fiscal year 2022, ended March 31, 2022. Its gains on investments amounted to $1.73 billion for the period. Its net profit grew 99.4% from the last year to $7.18 billion. The company’s net profit attributable to ITOCHU came in at $6.70 billion, registering an increase of 104.3% year-over-year. In addition, its trading income rose 44.4% from the prior year to $4.76 billion.
Analysts expect ITOCY's revenue for its fiscal year 2023 ending March 31, 2023, to come in at $87.03 billion, representing a 242.1% rise year-over-year. The company has an impressive revenue history; it has surpassed the consensus revenue estimates in three of the trailing four quarters.
Over the past six months, the stock slumped 8.7% in price and closed yesterday’s trading session at $54.20.
ITOCY's strong fundamentals are reflected in its POWR Ratings. The stock has an overall A grade, which translates to Strong Buy in our proprietary rating system.
ITOCY has a grade of A for Stability and a B for Growth and Value. Within the B-rated Industrial - Manufacturing industry, it is ranked #2 of 37 stocks. To see additional POWR Ratings (Momentum, Sentiment, and Quality) for ITOCY, click here.
Click here to check out our Industrial Sector Report for 2022
KO shares were trading at $65.20 per share on Friday afternoon, up $0.69 (+1.07%). Year-to-date, KO has gained 10.96%, versus a -14.99% rise in the benchmark S&P 500 index during the same period.
About the Author: Mangeet Kaur Bouns
Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions.
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