Warren Buffett’s new 13F is out – and he’s leaning on these 3 big stocks to fight red-hot inflation.

Warren Buffett's new 13F is out - and he's leaning on these 3 big stocks to fight red-hot inflation.

Warren Buffett’s new 13F is out – and he’s leaning on these 3 big stocks to fight red-hot inflation.

The price level is rising. In October, US consumer prices surged 7.7% from a year ago – down from 9.1% in June but still worryingly high.

Spiking inflation has severe consequences for your cash savings.

Fortunately, investing legend Warren Buffett has plenty of advice on what to own when consumer prices rise.

In a 1981 letter to shareholders, Buffett highlighted two business traits that investors should look for when trying to fight inflation: 1) the power to increase prices easily, and 2) the ability to take on more business without having to spend excessively.

Here are four Berkshire holdings that largely boast their characteristics.

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American Express (AXP)

Last year, American Express demonstrated its pricing power when it raised the annual fee on its Platinum Card from $550 to $695.

The company also stands to benefit immediately in an inflationary environment.

American Express makes most of its money through discount fees – merchants are charged a percentage of each Amex card transaction. As prices of goods and services rise, companies must take a larger cut of bills.

Business is booming. In Q3, the company’s revenue rose 24% year over year to $13.6 billion.

American Express is the fifth largest holding in Berkshire Hathaway. Owning 151.6 million AXP shares, Berkshire’s stock is worth about $23.2 billion.

Berkshire also owns shares of American Express competitors Visa and Mastercard, although its holdings are smaller.

American Express stock currently yields a 1.4% dividend.

Coca-Cola (KO)

Coca-Cola is a classic example of a recession-proof business. Whether the economy is booming or struggling, a can of Coke is affordable for most people.

The company’s entrenched market position, massive scale, and iconic brand portfolio – including names like Sprite, Fresca, Dasani and Smartwater – give it a lot of pricing power.

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Add solid geographic diversification — its products are sold in more than 200 countries and territories around the world — and it’s clear that Coca-Cola can thrive through thick and thin. After all, the company went public more than 100 years ago.

Buffett has held Coca-Cola in his portfolio since the late ’80s. Currently, Berkshire owns 400 million shares of the company, worth about $24.1 billion.

You can lock in a 2.9% dividend yield from Coca-Cola stock at current prices.

Apple (AAPL)

No one who spends $1,600 on a full iPhone 14 Pro Max would call it a steal. But consumers like splurging on Apple products anyway.

Earlier this year, management revealed that the company’s active installed hardware base has exceeded 1.8 billion devices.

When competitors offer cheaper devices, millions of users do not want to stay outside the Apple ecosystem. The ecosystem acts as the moat of the economy, allowing companies to make huge profits.

It also means that as spike inflationApple can pass on higher costs to its global consumer base without worrying too much about declining sales volumes.

Currently, Apple is Buffett’s largest public holding, representing nearly 40% of Berkshire’s portfolio by market value. Of course, Apple’s rising stock price is one of the reasons for that concentration. Over the past five years, the tech gorilla’s stock has risen more than 250%.

Apple currently yields a dividend of 0.6%.

Chevron (CVX)

One of Buffett’s big moves in 2022 is to load up on Chevron. According to an SEC filing, Berkshire owned $23.8 billion of the energy giant as of September 30 – a significant jump from its $4.5 billion stake at the end of 2021.

Today, Chevron represents the third-largest public holding in Berkshire.

It’s not hard to understand why. Although the oil business is capital intensive, it tends to be do very well during periods of high inflation.

Oil – the most traded commodity globally – has risen 16% this year. And the supply shock caused by Russia’s invasion of Ukraine could maintain that trend.

Strong oil prices benefit oil producers. Chevron’s most recent quarterly earnings were up 84% year over year. The stock is up more than 50% in 2022.

The company returns cash to investors, too. paying a dividend for ordinary of 1.42 $ per share, yielding 3.0% per year.

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This article provides information only and should not be construed as advice. It is provided without any guarantee.

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