2 No-Brainer Warren Buffett Stocks to Buy in the Post-Election Market Sell-Off and Hold Forever
As Buffett once said, it’s important to be greedy while others are fearful.
In the wake of the recent U.S. midterm elections, there has been significant uncertainty in equity markets. However, investors should not focus solely on short-term volatility and instead look for stocks that are worth holding onto forever, as Warren Buffett has emphasized. Two stocks that fit this criterion are Alphabet (GOOG +1.62%) (GOOGL +1.79%) and Coca-Cola (KO -0.13%).
While Warren Buffett typically avoids tech stocks, he recently invested in Alphabet through Berkshire Hathaway. This investment has since been followed by additional purchases, indicating the company's strong bullish sentiment. Alphabet's data flywheel, driven by its dominant search engine Google, is a key factor behind Buffett's confidence.
The company's advertising revenue remains a significant portion of its earnings, but its cloud computing segment, Google Cloud, has demonstrated impressive growth recently. Alphabet's total revenue rose by 25% year-over-year to $127.6 billion, while cloud revenue surged by 103% to $30.7 billion in the third quarter.
However, Alphabet's free cash flow has been negative due to its substantial investments in artificial intelligence (AI). Despite this, Alphabet's cloud industry remains underpenetrated, offering the company significant long-term growth potential. Additionally, Alphabet's potential in streaming and self-driving vehicles presents further attractive opportunities.
Coca-Cola, another stock recommended by Buffett, has been part of Berkshire Hathaway's public equity portfolio for decades and is likely to remain there for the foreseeable future. The beverage giant checks numerous boxes on Buffett's list, including being an easy-to-understand business, possessing a wide moat due to its iconic brand, generating consistent earnings and cash flow, and offering a stellar dividend with a record of raising payouts for 64 consecutive years, making it a Dividend King.
Although Coca-Cola has experienced a sharp decline following the elections, it has since mostly recovered. Even at its current valuation, the stock remains a compelling buy-and-hold opportunity. The Motley Fool's Stock Advisor has achieved an impressive total average return of 850%, outperforming the S&P 500's 210% return. Investors can gain insights into the 10 best stocks to buy right now by joining Stock Advisor.
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