Berkshire Hathaway has delivered incredible returns for investors through the years, thanks to the stalwart leadership of Warren Buffett. The massive conglomerate has its fingers in a lot of pies, from tech to insurance to healthcare.
Over the trailing decade alone, Berkshire has delivered investors a stunning return to the tune of 250%. For context, the S&P 500's trailing-10-year return sits around 240% at the time of this writing. Pull that window back another 10 years, and Berkshire has delivered a total 20-year trailing return of around 560%, while the wider market has delivered a return of about 545% in that time frame.
While individual investors won't have the capital at their disposal that the Oracle of Omaha does, that's all right. You can still become part owner of some of the companies Berkshire invests in, assuming those stocks align with your interests, investing style, and overall financial goals.
On that note, here are two companies in Berkshire's broad basket of holdings you might consider adding to your own basket of stocks in the near future.
1. DaVita
DaVita (DVA -0.80%) represents just a 1% slice of Berkshire's overall portfolio as one of a relatively small list of healthcare stocks owned by the multinational conglomerate. If you're not familiar with this health care stock, the company operates a network of thousands of outpatient dialysis centers across the country, as well as a smaller presence in several international markets.
Patients who receive dialysis usually require treatment several times a week. According to the National Kidney Foundation, kidney disease impacts roughly 40 million individuals across the country. As of 2018, around 786,000 individuals experienced kidney failure and required dialysis or a transplant, with the vast majority receiving dialysis. The dialysis market in the U.S. is valued at around $100 billion, with DaVita serving as one of the largest players in the space.
In the third quarter of 2023 alone, DaVita facilitated approximately 7.3 million total dialysis treatments. That's an average of 93,000 treatments every day. Revenue for the three-month period totaled $3 billion while operating income reached $496 million for the quarter.
Profits, according to generally accepted accounting principles (GAAP), totaled $247 million for the quarter and $541 million for the first nine months of 2023. DaVita also raked in a free cash flow of $453 million and an operating cash flow of $661 million in the third quarter of 2023.
The Oracle of Omaha has always stressed the importance of buying businesses, not stocks. While DaVita's stock performance hasn't been much to write home about the last couple of years, the stock has delivered a total return of around 96% over the last five years. This business has delivered a return on equity (ROE) of 53% over the trailing-five-year period, a sign that the company is increasing its value and managing investor capital well.
If you're looking for a stalwart health care company that can lend stable returns through the years rather than a lightning growth stock, this might be one to add to your list of potential buys.
2. Apple
Apple (AAPL -1.32%) is Berkshire's single-largest position, representing about 46% of its overall portfolio. The tech giant has notably eclipsed the performance of the broader market through the years. Looking at the trailing-five-year period, Apple has delivered a total return of 352% in that time frame compared to the S&P 500's 98% return.
Apple remains an indomitable leader in the global smartphone market. In the U.S., which is still the largest market for Apple, the company maintains a whopping 61% market share. Estimates show that Apple shipped 232 million smartphones globally in 2023.
Moreover, Apple's smartphone shipments in the final quarter of the year totaled approximately 25% of all global smartphone shipments, more than any other player in this space. That's on par with Apple's global market share of smartphone shipments in the fourth quarter of 2022 but slightly up from its position of approximately 21% in the first quarter of 2023.
iPhone sales totaled $70 billion in the first quarter of Apple's fiscal 2024, up 6% year over year. The second-largest driver of financial growth was Apple's services segment, which brought in record net sales of $23 billion, up 11% year over year. Total net sales for the three-month period came to $120 billion, a 2% bump from the prior-year quarter. Apple's trailing-12-month profits stand at $101 billion while operating cash flow for that same period is $116 billion.
Another tenet of Apple's business that has been core to Buffett's investment strategy through the years is a company with a faithful habit of paying and raising its dividend. While yielding just around 0.5%, Apple has boosted its dividend by 120% over the last decade alone.
The company's history of innovation through all market environments while maintaining wide moats in key target segments is nearly unmatched and makes it a wise addition to any long-term investor's portfolio.
