Warren Buffett knows how to pick 'em. The legendary investor has said he's a "business-picker" and not a stock-picker. But you and I know Buffett is good at both.
Some of the stocks the man nicknamed the "Oracle of Omaha" has picked began their winning ways well before he bought them. Here are three Buffett stocks that turned $10,000 into over $99,000 in only 10 years.
1. Amazon
If you invested $10,000 in Amazon(NASDAQ: AMZN) stock 10 years ago and didn't sell, your investment would be worth nearly $119,000 today. That translates to a compound annual growth rate of roughly 28%.
Buffett's Berkshire Hathaway didn't initiate a position in Amazon, though, until the first quarter of 2019. And he didn't make the call to buy the stock. Instead, Buffett told CNBC in May 2019 that "one of the fellows in the office that manage money" (a reference to either Todd Combs or Ted Weschler) bought shares of Amazon.
That turned out to be a smart move. Amazon's share price has more than doubled since the end of the first quarter of 2019. It's easy to pinpoint the main reason for the stock's impressive performance over the last five and 10 years: the rapid growth of the Amazon Web Services (AWS) cloud platform.
AWS has been a huge beneficiary of the migration of IT spending to the cloud from on-premises. The rise of generative AI has accelerated this shift as organizations scrambled to build AI models in the cloud.
2. Heico
Heico(NYSE: HEI) is one of the most recent additions to Berkshire's portfolio. In the second quarter of 2024, Buffett (or one of his investment managers) initiated a new position in the aircraft parts maker scooping up a little over 1 million shares.
Investors who had Heico on their radar screens much earlier than Buffett have done quite well. An initial investment of $10,000 in the stock in October 2004 would be worth more than $101,000 today. This figure, by the way, includes reinvesting dividends paid by Heico during the period.
One key factor behind Heico's huge gains is the company's acquisitions. Since 2014, Heico has acquired 34 businesses. The company was especially busy on the business development front in 2015 and 2019, acquiring seven businesses in both years. It acquired Wencor Group in 2023. This year, Heico has acquired the aerial delivery and descent devices divisions of Capewell Aerial Systems and a majority stake in Marway Power Solutions.
3. Apple
Buffett began buying shares of Apple(NASDAQ: AAPL) in the first quarter of 2016. Over time, the iPhone maker became Berkshire's largest holding -- a position it still holds. At Berkshire's annual shareholder meeting in May 2024, Buffett said that "unless something really extraordinary happens" Apple would remain a key part of the conglomerate's portfolio.
Berkshire has made a lot of money from its stake in Apple. So have many other investors. If you bought $10,000 of the stock 10 years ago and held onto all your shares, you'd have over $99,000 today with dividends reinvested.
Why was Apple such a big winner? Much of its success is due to the enduring popularity of the iPhone. However, Apple has also built a sprawling ecosystem centered around its smartphone. In particular, the company's services revenue has skyrocketed in recent years.
Are these stocks smart picks now?
It's easy to identify stocks that have delivered tremendous returns in the past. But are Amazon, Heico, and Apple smart picks now?
I think the answer is a resounding "yes" for Amazon. The migration to the cloud still has a long way to go. Artificial intelligence (AI) is still in its early stages. AWS is well-positioned to benefit from both tailwinds. Amazon also continues to improve its operations using technology, which boosts its profits and cash flow.
Heico continues to deliver strong revenue and earnings growth. The company's business is solid. My main concern, however, is valuation. Heico's forward price-to-earnings ratio is nearly 60. I'm unsure if the aircraft parts maker will be able to sustain its growth at a high enough level to justify that premium multiple.
What about Apple? Granted, Buffett has slashed Berkshire's stake in the giant company this year. But he still seems optimistic about Apple's long-term prospects. So am I.
It remains to be seen if the initial functionality included in Apple Intelligence (the company's first generative AI offering) will ignite a supercycle of iPhone upgrades. I wouldn't dismiss the possibility, though. I also fully expect Apple to emerge as a top player in the smartglasses market despite the disappointing launch of its Vision Pro mixed reality device.
Apple stock remains a smart pick, in my view, if you intend to buy and hold the stock for the long run.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Keith Speights has positions in Amazon, Apple, and Berkshire Hathaway. The Motley Fool has positions in and recommends Amazon, Apple, and Berkshire Hathaway. The Motley Fool recommends Heico. The Motley Fool has a disclosure policy.
