After a strong bull run over the last few years, the market indexes have pulled back in 2025. Warren Buffett has made some of his greatest investments when stock prices are down, and his company continues to hold several quality stocks that can help you build wealth for retirement.
Berkshire Hathaway holds shares of several top companies that have passed inspection of one of the greatest investors of all time. Coca-Cola (KO -0.46%) and American Express (AXP -1.66%) are two of Buffett's favorite businesses of all time, considering how long Berkshire has held their shares. Here's why these stocks are great buys right now.
1. Coca-Cola
Holding stocks of companies that generate steady sales volumes throughout the year can make for rewarding and relatively safe investments. It's for this reason that can explain why Coca-Cola stock has surged 16% year-to-date.
Berkshire Hathaway has held a position in Coca-Cola since 1988, and it's easy to see why. People consume more than 2.2 billion servings of one of the company's products every day. Coca-Cola owns dozens of brands across tea, coffee, energy, and water. This large portfolio of products means the company is able to generate sales for different occasions and consumer preferences.
NYSE: KO
Key Data Points
Coca-Cola has experienced some sales headwinds over the last few years stemming from inflation and a cautious consumer spending environment, but it's a profitable business. Almost 60% of its revenue last year came from selling concentrate syrup to bottlers, which generates healthy margins as it doesn't require a lot of capital investment. Coca-Cola earned $10.6 billion in net income on $47 billion of revenue in 2024, and the company has ample opportunities to grow its revenue over time.
Coca-Cola sees plenty of growth opportunities in a global beverage industry valued at $276 billion, according to Statista. It is investing to expand manufacturing capacity and tailor its offering to serve local preferences in regions around the world.
The company recently raised its quarterly dividend for the 63rd consecutive year, bringing its forward dividend yield to 2.81%. The stock should hold up well in 2025 and deliver many years of dividend increases and solid returns to shareholders.
2. American Express
American Express is another top brand that has been a core holding in Berkshire's portfolio for more than 30 years. The company continues to show why it deserves a spot in any investor's retirement account. The stock has soared over the last few years following solid financial results.
NYSE: AXP
Key Data Points
This major card brand benefits from an affluent card member base that spends more than the average credit card holder. The company's billed business, or card member spending, grew 6% in 2024 to surpass $1.5 trillion. At that level of growth, management believes it can deliver mid-teens annual growth in earnings per share.
American Express gained a record 13 million new card acquisitions last year, and this bodes well for the future, as card members may upgrade to premium cards over time, such as the Gold or Platinum, that charge higher annual fees. Net card fees are a recurring source of revenue that grew 16% last year to $8.4 billion.
While card member spending can weaken during recessions, the company should continue to grow over the long term as it has for decades. One thing going for it is that American Express is a very desirable brand among younger demographics. American Express is adding creditworthy customers in these age groups at a faster rate than the rest of the industry.
Warren Buffett clearly places a high value on the American Express brand and its profitable business model. It reported $10.1 billion in net income on $65 billion of revenue last year. Analysts expect the company's earnings per share to grow at an annualized rate of 15% in the coming years, which makes the stock's forward price-to-earnings multiple of 17 look quite attractive.
