Since taking control of Berkshire Hathaway in 1965, Warren Buffett has delivered incredible returns for its shareholders. He did that by acquiring a diverse group of strong businesses in the insurance, railroad, energy, and mortgage sectors, among others. Berkshire also owns and manages an equities portfolio through which Buffett and his team invest the firm’s capital in a select group of stocks. Today, that portfolio alone is valued at more than $278 billion. Although the Oracle of Omaha is set to step down as Berkshire’s CEO at the end of the year, there will always be some holdings in the portfolio that are true Buffett stocks, and these are two no-brainer Buffett stocks to buy right now.
Coca-Cola: A safe haven in times of uncertainty
Buffett is a disciplined investor: When he buys a stock, it happens after serious due diligence, and he prefers to hold those picks for the long haul. This means investing in companies that can navigate an entire business cycle — the good and the bad. Coca-Cola (KO 1.03%) certainly falls into this category, and it’s a stock that Berkshire has owned since 1988. It may not have the same upside as a high-flying artificial intelligence stock, but it will serve investors well in a tough environment.
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This year, despite a difficult macroeconomic environment in which most segments of the market have struggled at one point or another, Coca-Cola is up by more than 15%. It’s a leader among consumer staple stocks, which tend to fare well during recessionary environments because consumers use their products regularly in their daily lives, and generally won’t stop buying them even if their finances are pinched.
Coca-Cola has also convinced investors that it can survive the effects of high tariffs. After delivering solid first-quarter earnings results, the company essentially reiterated its full-year guidance for 5% to 6% organic revenue growth. Coca-Cola is not immune from tariffs — particularly the 25% tariff on aluminum. But it has flexibility because it can pass higher costs on to consumers to some degree, and could also shift more of its output to plastic packaging if aluminum prices stay high.
Coca-Cola also pays a dividend that, at current share prices, yields 2.8%, and it has raised that dividend annually for 63 straight years. The company expects to generate $9.5 billion of free cash flow this year, which will more than cover its projected dividend payments.
Visa: The ultimate moat
While Berkshire hasn’t had a stake in Visa (V -1.05%) for as long as it has been invested in Coca-Cola, the conglomerate first purchased the payments giant’s stock in 2011, so it has still been a great run. Visa runs the largest card network in the world. In its fiscal 2024 (which ended Sept. 30), Visa processed $13.2 trillion in total payment volume.
Visa arguably has one of the best moats of any publicly traded company. One can think of Visa as a toll station on the highway, but for the credit and debit card ecosystem. For every transaction processed, Visa collects a fee, and it also gets to make many of the rules on its network. This is the kind of setup that Buffett loves.
Sure, it has a few competitors like Mastercard, but it would be difficult for others to challenge the big established players in the space because building a network of the scale that Visa has achieved isn’t easy. Many would-be challengers have tried to come up with alternative payment rails, only to fail or eventually partner with Visa and Mastercard. Visa also has plenty of resources to invest in new payments technology, and has already invested significantly in crypto and stablecoins.
In the earnings report for its fiscal 2025 second quarter, which it delivered in late April, management reaffirmed its previous guidance and largely said that, so far, consumer spending has remained robust and resilient. While Visa is not immune to the ups and downs of the economy, and could struggle if consumer spending slows significantly, the company has successfully navigated previous economic downturns.
Furthermore, Visa’s business has something of a built-in hedge against inflation because while consumer prices may rise, the fee percentages that Visa charges for network transactions remain the same, so as prices rise, so too does the company’s fee income.
Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway, Mastercard, and Visa. The Motley Fool has a disclosure policy.