Warren Buffett, known as the “Oracle of Omaha,” is one of the most successful institutional investors of all time. He is the chairman and CEO of Berkshire Hathaway Inc. (BRK.A, BRK.B). As of November 2, his real-time net worth stood at $102.40 billion.
Over the past year, BRK.A has gained 2.8%, while the broader S&P 500 index has declined 16.4%. Moreover, over the past month, BRK.A is up 9%, outpacing the S&P 500’s 7.5% gains.
The Fed is set to hike rates again, and the midterm elections are nearing. Therefore, the overall economic uncertainty would likely be around for a while. Hence, it might be an ideal opportunity for investors to consider the top Warren Buffett portfolio holdings to garner returns.
Fundamentally strong and dividend-paying stocks The Coca-Cola Company (KO), McKesson Corporation (MCK), and The Kroger Co. (KR) are part of the BRK.A portfolio. Given their strong fundamentals, these stocks might be ideal to buy and hold forever.
The Coca-Cola Company (KO)
KO, a popular beverage company, manufactures, markets, and sells various non-alcoholic beverages worldwide. The company provides sparkling soft drinks, flavored and enhanced water, sports drinks, juice, dairy, plant-based beverages, tea and coffee, and energy drinks.
On October 20, KO declared a dividend of 44 cents per common share, payable to shareholders on December 15, 2022. This reflects the company’s solid cash generation ability.
On September 29, KO and Molson Coors Beverage Company (TAP) expanded its exclusive agreement to develop and commercialize Topo Chico Spirited, a spirit-based, ready-to-drink cocktails line. It is set to be launched in more than 20 markets across the country in 2023. This should benefit the company.
For the fiscal third quarter ended September 30, KO’s net operating revenue came in at $11.06 billion, up 10.2% year-over-year. Its non-GAAP gross profit increased 6.5% year-over-year to $6.54 billion. Furthermore, its non-GAAP net income per share increased 6.2% year-over-year to $0.69.
Analysts expect KO’s EPS and revenue to increase 6.8% and 10.4% year-over-year to $2.48 and $42.67 billion for the fiscal year ending December 2022. Moreover, KO has an impressive surprise earnings and revenue history, as it has topped consensus EPS estimates in all four trailing quarters.
The stock has gained 6.2% over the past year to close its last trading session at $59.64. It has gained 6.5% over the past month.
KO’s POWR Ratings reflect its promising outlook. The stock has an overall rating of B, which translates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
KO is also rated a B in Stability, Sentiment, and Quality. Within the A-rated Beverages industry, it is ranked #21 of 33 stocks.
To see additional POWR Ratings for Value, Growth, and Momentum for KO, click here.
McKesson Corporation (MCK)
MCK is a diversified healthcare service provider operating globally. The company operates through its four segments: U.S. Pharmaceutical; Prescription Technology Solutions (RxTS); Medical-Surgical Solutions; and International.
On October 27, MCK declared a regular dividend of 54 cents per share of common stock, payable on January 3, 2023. This underscores its shareholder returns ability.
On September 29, MCK announced that it would extend its long-standing partnership with CVS Health Corporation (CVS) to distribute pharmaceuticals to mail-order and specialty pharmacies, retail pharmacies, and distribution centers through June 2027. This should boost the company’s top line.
On September 19, MCK signed a definitive agreement to acquire Rx Savings Solutions, a prescription price transparency and benefits insight company. MCK expects to use the combined medication access, affordability, and adherence services as a foundation to support its biopharma growth.
For the fiscal 2023 second quarter ended September 30, total revenues increased 5.4% year-over-year to $70.16 billion. Net income attributable to MCK increased 246.8% year-over-year to $926 million for the same period. Its adjusted earnings and adjusted EPS came in at $874 million and $6.06, respectively.
For the fiscal quarter ending December 2022, analysts expect MCK’s EPS and revenue to be $6.22 and $71.63 billion, indicating a 1.2% and 4.4% year-over-year growth, respectively.
The stock has gained 53.7% year-to-date to close its last trading session at $382.04. It is up 12.4% over the past month.
It’s no surprise that MCK has an overall A rating, which translates to Strong Buy in our proprietary POWR Ratings system.
MCK is also rated an A for Growth and a B for Sentiment, Stability, and Value. In the Medical – Services industry, it is ranked #1 of 78 stocks.
Click here to see the additional POWR Ratings for MCK (Momentum and Quality).
The Kroger Co. (KR)
KR operates combination food and drug stores, multi-department stores, marketplace stores, and price impact warehouses. It also manufactures and processes food products for sale in its supermarkets and online and sells fuel.
On October 14, KR and Albertsons Companies (ACI) announced that they have entered into a definitive agreement under which the companies are expected to merge. This merger aims to expand customer reach and improve proximity to deliver fresh and affordable food to approximately 85 million households with a premier omnichannel experience.
On September 15, KR declared a quarterly dividend of 26 cents per share, payable to shareholders on December 1. This reflects on the company’s ability to pay back its shareholders.
For the fiscal second quarter of 2022, KR’s sales increased 9.3% year-over-year to $34.64 billion. The company’s operating profit for the same period increased to $954 million, indicating 13.7% year-over-year growth. Its adjusted EPS improved 12.5% year-over-year to $0.90.
For the fiscal third quarter ended October 2022, analysts expect KR’s revenue to be $34 billion, indicating a 6.7% year-over-year growth. Street EPS estimate for the same period of $0.80 reflects a rise of 3.1% from the prior-year period. In addition, KR has topped consensus EPS estimates in all four trailing quarters.
The stock has gained 4.2% year-to-date to close its last trading session at $47.17. It has gained 3.7% over the past five days.
KR has an overall A rating, which equates to a Strong Buy in our POWR Ratings system.
KR is also rated a B for Quality, Value, and Growth. It is ranked #6 of 38 stocks in the A-rated Grocery/Big Box Retailers industry.
Click here to see additional POWR Ratings of KR for Stability, Sentiment, and Momentum.
KO shares were trading at $59.47 per share on Wednesday afternoon, down $0.17 (-0.29%). Year-to-date, KO has gained 2.68%, versus a -18.69% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research.
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