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3 Top Warren Buffett Stocks to Buy and Hold

Follow the leader. It's not just a game that children play. For some, it's their investment strategy.

The idea is to base your own investments on a successful investor's portfolio. There are quite a few famous investors who you could follow, and Warren Buffett stands out as one of the greatest. He earned the nickname "Oracle of Omaha" by outperforming the market for decades.

Following the leader isn't always the best investing approach, though. Your current situation and goals are likely quite different from a multibillionaire like Buffett.

However, there are some stocks that the legendary investor likes that are also great long-term picks for many not-so-famous investors. Here are three top Buffett stocks to buy and hold.

Image source: The Motley Fool.

1. Berkshire Hathaway

Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) stands out as the obvious Buffett stock to buy and hold. With Berkshire, you'll get to fully share in the great investor's future success.

From 1965 (when Buffett took over) to 2020, Berkshire Hathaway stock delivered a compounded annual gain of 20%. That's nearly double the return of the S&P 500 index during the period. So far this year, Berkshire's performance is close to its historical average gain.

Will Berkshire keep up its winning ways? Probably so. For one thing, the company sits atop a massive cash stockpile of more than $140 billion. And Berkshire's core businesses keep churning out more cash. There's a lot of dry powder to use in buying stocks at a discount in the next major pullback.

Also, Buffett is allowing his investment managers to call the shots more frequently on which stocks to buy. That's resulting in a more aggressive strategy that could pay off handsomely over the long term.

2. Apple

Outside of Berkshire Hathaway itself, Apple (NASDAQ: AAPL) ranks as Buffett's favorite stock. It's no coincidence that Berkshire owns far more shares of the tech giant than any other company.

Apple stock has given investors more than a five times return over the last five years, but shares are lagging behind the overall market in 2021. However, this $2.5 trillion company still has plenty of room to grow.

The increased adoption of 5G networks continues to fuel higher iPhone sales. This trend also benefits much of Apple's ecosystem, including the App Store, iCloud, and peripheral devices such as AirPods and Apple Watch.

Apple also has other growth drivers. Its AppleTV+ streaming service is becoming a powerhouse in its own right. Augmented reality and virtual reality also present tremendous growth opportunities for the company.

3. Johnson & Johnson

Buffett used to be a bigger fan of Johnson & Johnson (NYSE: JNJ) than he is now. The healthcare stock makes up only a tiny portion of Berkshire's portfolio. However, J&J is nonetheless one of the best Buffett stocks to own if you have a long-term investing horizon.

Johnson & Johnson is the biggest global player in the fast-growing healthcare market. Many of its products are necessities instead of "nice-to-haves." J&J is a leader in multiple major healthcare arenas -- consumer health, medical devices, and pharmaceuticals.

Granted, Johnson & Johnson stock has badly underperformed the S&P 500 over the last decade. The company is in a stronger position for growth now, though, thanks in large part to its research and development investments and acquisitions. Roughly one-fourth of J&J's total sales come from products launched over the past five years.

Buffett lives by two rules of investing. Rule No. 1 is never lose money. Rule No. 2 is don't forget Rule No. 1. With its diversified healthcare operations and financial strength, Johnson & Johnson is arguably one of the best stocks to buy and hold to follow Buffett's investing rules.

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Keith Speights owns shares of Apple and Berkshire Hathaway (B shares). The Motley Fool owns shares of and recommends Apple and Berkshire Hathaway (B shares). The Motley Fool recommends Johnson & Johnson and 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.


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