Warren Buffett's Two Stocks to Hold Forever

"When we have some great businesses and great management, our favorite holding period is forever."

——Warren Buffett, Berkshire Hathaway1998 Letter to Shareholders

Warren Buffett has created incredible wealth for Berkshire Hathaway shareholders. As he mentioned in his 1988 letter to shareholders, his focus on investing in quality companies and holding them for the long term without being bothered by occasional market fluctuations was very inspiring to individual investors.

Here are two stocks in your Berkshire portfolio that can help you grow your savings and achieve a richer retirement.

Berkshire Hathaway in apple (NASDAQ:AAPL) Despite the stock's recent sell-off since 2016, Buffett noted earlier in 2024 that Apple will likely remain Berkshire Hathaway's largest holding by the end of the year. In fact, as of the end of the third quarter, Berkshire still held 300 million shares of the iPhone maker, with a market value of nearly $70 billion. By comparison, Berkshire's second-largest holding, American Expressworth $41 billion.

Buffett has a better opinion of Apple than any of Berkshire's businesses in 2023, and it's easy to see why. Apple has a growing base of loyal customers, and many of the company's customers own multiple devices. From January 2018 to early 2024, Apple's active device installations increased from 1.3 billion to 2.2 billion.

Apple continues to attract new customers around the world. In the most recent quarter, management reported another record high active base across all products and geographies.

This growth bodes well for the future of Apple's services business, which has much higher profit margins than sales of hardware products. Apple has been investing in expanding the quality and variety of its services in recent years, which has led to more than 1 billion paid subscriptions on the company's platform, helping to drive record revenue in a year when iPhone sales have been sluggish.

Apple's revenue rose 2% to $391 billion in fiscal 2024, which ended in September, driven primarily by a 13% rise in services revenue. The introduction of Apple Intelligence will likely drive more upgrades, as it will only run on devices with newer processors. As Apple integrates artificial intelligence (AI) capabilities into its products and services, this remains a key catalyst for growth.

Apple's high profits from its products pushed the company's net profit to $93 billion last year. Apple has significant resources to reinvest in new products and services to drive long-term growth. The stock has become expensive over the past year, but if you start a position and invest in it at a dollar cost average price over time, you should earn handsome returns.

Berkshire Hathaway holds 10 million shares Amazon (NASDAQ: AMZN) Amazon has been the e-commerce and cloud computing leader in the third quarter since 2019. Amazon continues to grow its online retail business while creating lucrative money-making opportunities in other services.

Amazon's huge lead in e-commerce, with a market share six times that of its next-largest competitor, puts it well positioned for long-term growth. Recent consumer spending trends have made it difficult for Amazon to maintain the high growth rates of its online store, but it still shows a lot of potential. Lower selling prices attracted more customers, and the number of paid purchases accelerated to 12% year-on-year in the third quarter.

Ultimately, Amazon's strength lies in its Prime membership program. Amazon continues to make it difficult for customers to cancel their membership by surrounding all the benefits it offers with Prime, including access to grocery delivery and medical prescriptions through RxPass. Amazon says it will have more than 200 million Prime members by 2021, but that number is still growing. Paid membership growth accelerated in the third quarter, driving subscription revenue to grow 11% year-on-year.

What's most impressive about Amazon is its success in developing profitable revenue streams outside of its core retail services, such as its cloud computing division (Amazon Web Services). Amazon originally developed the cloud service to support the growth of its online store, but it turned out there was a huge market for the service outside the company. Amazon Web Services currently has annual revenue of $103 billion.

Profitable growth in cloud computing and recent efforts to cut costs helped Amazon post a net profit of $50 billion last year. Its continued investment in new fulfillment centers and artificial intelligence capabilities shows that there are still huge opportunities for growth and returns for Amazon investors over the years.

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*Stock Advisor returns as of January 13, 2025

American Express is an advertising partner of Motley Fool Money. John Mackey is the former CEO of Amazon subsidiary Whole Foods Market and a board member of The Motley Fool. John Ballard has no position in any of the stocks mentioned. The Motley Fool owns and recommends stocks of Amazon, Apple, and Berkshire Hathaway. The Motley Fool has a disclosure policy.

2 Warren Buffett Stocks Worth Holding Forever originally published by The Motley Fool