AAPL

Apple Inc.

141.66
USD
2.45%
141.66
USD
2.45%
129.04 182.94
52 weeks
52 weeks

Mkt Cap 2.32T

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If I Could Only Buy 1 Stock, This Would Be It

Generally, it's a bad idea for an investor to buy only one stock. The Motley Fool suggests you should aim for a portfolio of at least 25 stocks to protect yourself against extreme volatility in any particular stock. With that said, Berkshire Hathaway (NYSE:BRK.A)(NYSE:BRK.B), the nearly $700 billion holding company, could be considered the exception to the rule. Here are three reasons why Berkshire Hathaway would be my choice if I could only buy one stock. Reason one: A portfolio unlike any other As a holding company, Berkshire owns a majority stake in over 60 subsidiaries ranging from insurance companies like Geico to consumer favorites like Dairy Queen and See's Candies. Berkshire currently holds stock in over 40 publicly traded companies across the energy, consumer goods, and fintech sectors. However, despite what appears to be a heavily diversified stock portfolio, certain positions are much more concentrated than others. CEO Warren Buffett once famously said, "Diversification as practiced generally makes very little sense for anyone that knows what they're doing...[it] is a protection against ignorance." Buffett practices what he preaches, so over 40% of Berkshire's $360 billion-plus portfolio is in Apple stock. And only five companies make up about 75% of Berkshire's managed holdings. Reason two: A history of beating the market With its unique portfolio, Berkshire Hathaway stock doesn't typically track the performance of an index fund like the S&P 500; it crushes it. In a year like 2022, when the stock market is down 15%, Berkshire's stock is up about 3%. Additionally, Berkshire is outperforming the S&P 500 with dividends included on a one-, three-, and five-year basis. Since Warren Buffett took the helm at Berkshire Hathaway in 1965, the company has produced a 20.1% compound annual gain, nearly doubling the S&P 500's 10.5% compound annual return during the same time period. So while past performance doesn't necessarily predict future results, Berkshire Hathaway has proven time and time again that it's well-positioned to outperform the market. Reason three: A mountain of cash With Berkshire's insurance business, the company receives premiums from its customers upfront. This cash -- called "the float" -- is theirs to invest until policyholders' claims deplete it. As a result, Berkshire currently has $106 billion in cash to deploy for stock investments. So despite recent interest rate hikes, where many companies will have to pay more to borrow money, Berkshire's cash hoard insulates the company from needing to borrow money at higher rates. And as previously mentioned, the stock market is down 17% in 2022, meaning Berkshire can invest in companies at deflated prices. That played out in the first quarter of 2022 when Berkshire deployed $51 billion after years of doing very little with its outsized cash position. Buffett has previously stated he will never let Berkshire's float fall below $30 billion, which still leaves plenty of room for him to invest more money. The bottom line Beyond these reasons why Berkshire Hathaway is a stock worth buying, what if I told you the greatest investor of the last 75 years is buying the stock at a historic rate? That's right; Warren Buffett directed Berkshire Hathaway to repurchase $51.7 billion in stock, or roughly 9% of the company's shares outstanding since year-end 2019. Look to Berkshire Hathaway's next 13F -- a quarterly report that discloses a holding company's stock positions -- to see if the company put more of its pile of cash to work to take advantage of the down market. Alternatively, Buffett could just continue buying back Berkshire stock. Either way, the company is well-positioned to outperform the market -- just as it has done throughout Buffett's tenure. 10 stocks we like better than Berkshire Hathaway (B shares) When our award-winning analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.* They just revealed what they believe are the ten best stocks for investors to buy right now... and Berkshire Hathaway (B shares) wasn't one of them! That's right -- they think these 10 stocks are even better buys. *Stock Advisor returns as of April 7, 2022 Collin Brantmeyer has positions in Berkshire Hathaway (B shares). The Motley Fool has positions in and recommends Apple and Berkshire Hathaway (B shares). The Motley Fool recommends the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), long March 2023 $120 calls on Apple, short January 2023 $200 puts on Berkshire Hathaway (B shares), short January 2023 $265 calls on Berkshire Hathaway (B shares), and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

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