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Motley Fool: Buffett Still Likes Favorites Apple, Coca-Cola — Here's Why

Motley Fool: Buffett Still Likes Favorites Apple, Coca-Cola — Here's Why

By    |   Tuesday, 23 August 2016 01:07 PM

 

With the general stock market relatively calm amid uncertainty about the Federal Reserve’s interest-rate antics, Motley Fool suggests that it’s the perfect time to follow Warren Buffett’s strategy and buy two stocks loved by consumers.

“Apple and Coca-Cola are both great long-term, low-risk investments for investors -- typical characteristics of Buffett investments. If not worth buying, they're at least worthy of a spot on your watch list,” the Fool advised.

Buffett’s Berkshire Hathaway recently increased its stake in Apple (NASDAQ:AAPL ) by 55%, bringing the total value of its Apple stock to about $1.7 billion, the Fool reported.

“With a position this large, Berkshire's Apple position is now worth more than its $1.6 billion position in General Motors,” it said. “Given Berkshire's tendency to avoid technology stocks, Buffett or his investing lieutenants must be confident the stock is undervalued in order to build a position worth nearly $2 billion in such a short period of time. Of course, it doesn't take a genius to realize Apple's price-to-earnings ratio of under 13 does look a bit like a buying opportunity; it's not very often market leaders trade with valuations this conservative,” the Fool said.

Berkshire owns $17.6 billion worth of Coca-Cola (NYSE:KO), making it Berkshire's third-largest holding after Kraft Heinz and Wells Fargo, the Fool said.

“With a price-to-earnings ratio of 25, the stock certainly doesn't look as cheap as Apple. But when it comes to a sustainable business, Coca-Cola is one of the best examples there is. So investors shouldn't expect Coca-Cola to trade at a cheap-looking valuation any time soon. Combining its powerful beverage brands with the company's unparalleled global distribution, Coca-Cola boasts both pricing power and economies of scale -- a formidable combination, making up a strong competitive advantage,” the Fool said.

“Thanks to Coca-Cola's consistent ability to drive decades of healthy profits for shareholders, it has a nice dividend, too. Investors who buy today get a dividend yield of 3.2% (this easily beats Apple's dividend yield of 2.1%) and the comfort of knowing future increases are likely: Coca-Cola has increased its dividend for 53 years straight.”

And Newsmax Finance Insider Tony Sagami applauds Buffett's business acumen for focusing on dividends.

"One of the biggest dividend lovers of all is Warren Buffett. He has more than 90% of the Berkshire Hathaway portfolio invested in dividend-paying stocks," Sagami wrote.

(Newsmax wire services contributed to this report). 

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With the general stock market relatively calm amid uncertainty about the Federal Reserve's interest-rate antics, Motley Fool suggests that it's the perfect time to follow Warren Buffett's strategy and buy two stocks loved by consumers.
apple, coke, warren buffett, berkshire hathaway
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2016-07-23
Tuesday, 23 August 2016 01:07 PM
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