Stocks to buy

As we near the holiday season, investors looking for stocking stuffer stocks for their loved ones have come to the right place. In compiling such a list, the best place to start would be with the portfolio of one of the greatest investors of all time.

Indeed, most investors sit up and pay attention whenever Berkshire Hathaway (NYSE:BRK-B) CEO Warren Buffett buys or sells a stock. This company’s 13-F filings are among the most-watched in the market for a good reason. Buffett is among the best leading indicators to watch for long-term investors looking at where the smart money is investing in this market.

Accordingly, it’s not surprising to note that Berkshire has been loading up on energy stocks over the past year, with continued purchases of both Occidental Petroleum (NYSE:OXY) and Chevron (NYSE:CVX). Sticking to industries he knows, Buffett has carved out a compelling portfolio of quality companies trading at reasonable prices.

Additionally, Buffett’s tech exposure (which I’ll get to in a minute) has also outperformed. His picks across various sectors within his realm of expertise are all holdings I have on my watch list right now.

With that said, let’s dive into seven stocks to put in one’s holiday stockings as we head into a new year.

AAPL Apple $143.25
BAC Bank of America $32.69
BK Bank of New York Mellon $45.04
CVX Chevron $172.99
C Citigroup $46.54
DEO Diageo $188.49
HPQ HP Inc. $28.46

Apple (AAPL)

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One of the best-performing stocks over the past decade, Apple (NASDAQ:AAPL) has become one of Warren Buffett’s most successful investments. The Oracle of Omaha began building a massive stake in the world’s largest company in early 2016. Since then, this company has continued to surge to new highs.

Apple’s ability to maintain high gross profit margins via selling high-valued products to a loyal consumer base can’t be understated. Apple remains among the most valuable brands in the world due mainly to its closed-loop ecosystem. Accordingly, many investors continue to hold Apple as a very long-term investment, even at these levels (Buffett included).

Now down more than 20% from its all-time high, Apple is (finally) trading at a discount for value investors. While Buffett has done some trimming in the past, this holding is by and far the largest in his portfolio. As of writing, Berkshire Hathaway currently holds more than 915 million shares of AAPL stock, valued at more than $131 billion. That’s good for a 39.4% weighting in his portfolio.

Bank of America (BAC)

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One of the world’s largest banks, Bank of America (NYSE:BAC), is in the second-largest position in Warren Buffett’s portfolio. Berkshire’s stake, worth more than $33 billion, makes up around 10% of the company’s holdings. Thus, this is a logical stocking stuffer idea for those interested in gaining exposure to the banking sector.

Bank of America’s diversified business model focuses on the individual/retail banking market, institutional investors, corporations of all sizes, and government lines of business. The mega-cap multinational lender is a systemically important bank, providing investors with a floor in worst-case scenarios (remember the whole “too big to fail” discussion during the last financial crisis?). This obviously bodes well for investors concerned about what could be a painful recession on the horizon.

On a monthly basis alone, BAC stock is down roughly 10%, giving investors looking for exposure a nice entry point here. As we head into the holiday season, Bank of America is one gift worth considering.

Bank of New York Mellon (BK)

Sticking with the financial space for a minute, Bank of New York Mellon (NYSE:BK) makes this list of top stocking stuffer stocks to buy for a good reason.

The Bank of New York Mellon offers financial services in both the U.S. market and globally. Thus, unlike its name suggests, the Bank of New York Mellon is much more than a small regional bank.

This lender’s focus on the securities, wealth management and investment markets is why Buffett is so keen on this bank. These areas of the lending world tend to be less cyclical than retail or corporate banking, for example. Generally speaking, the rich find a way to keep their capital, even during difficult times. Thus, this is a more recession-resistant name worth considering for defensive investors.

Buffett’s stake of 62.5 million shares is worth around $2.8 billion.

Chevron (CVX)

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The only energy stock to make this list of top stocking stuffer stocks is Chevron, and that’s not taking anything away from the aforementioned Occidental Petroleum. Aside from being a company I think is an incredible long-term investment, Chevron has also found its way into Warren Buffett’s portfolio, no small feat.

Indeed, Warren Buffett received plenty of flack for his investment in Chevron and other energy names over the past couple of years. Of course, Berkshire is already a big player in this space via its energy division, and the company is doing plenty of great things in building out high-power transmission lines, which will accelerate the electrification movement. Thus, if anything, Mr. Buffett puts his money where his mouth is, and the profits will be.

That said, his bet on Chevron appears to be both a smart medium-term bet, as well as a market hedge. If inflation continues to soar, Chevron’s gains can soften the blow from his other positions. Thus, this is a stock worth considering.

With just under 170 million shares, Buffett’s stake in Chevron is worth $29.3 billion.

Citigroup (C)

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There’s a trend building with this list of stocking stuffer stocks. Indeed, investors who know Warren Buffett know his affinity toward financial companies. Citigroup (NYSE:C) is yet another holding in this category within Berkshire Hathaway’s portfolio worth considering.

However, the lender’s performance over the past year has not been great. So, why has this stock made this list?

Well, perhaps the most globally-centric bank on this list, Citigroup, is an option for investors looking for ex-U.S. exposure to this sector. Given the relative outperformance of the U.S. market during this previous bull run, investors may start to focus in on international exposure from here. With most investors focused on the U.S. market, Citigroup’s valuation may be overlooked. Thus, this is among Buffett’s more sleepy holdings I like.

Currently, Berkshire holds a little more than 55 million shares of C stock, worth $2.5 billion.

Diageo (DEO)

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Among the smallest positions in Warren Buffett’s portfolio, Diageo (NYSE:DEO) is a company that I’ve noted has been a Buffett holding in the past. That said, with only 227,750 shares of DEO stock, Berkshire’s position in this liquor maker sits at “only” $43 million. Thus, given the size of Berkshire Hathaway’s overall portfolio, this amounts to far less than 0.1% of the company’s overall holdings.

So, why is this stock worth putting on investors’ radars this holiday season? Well, alcohol consumption tends to remain relatively inelastic relative to economic conditions. In good times or bad, people will drink. Many will argue that when times are tough, the desire for a glass of Johnny Walker whiskey will increase, not decrease.

The company’s various brands, which include Johnny Walker and others, provide Diageo with a moat in this highly-competitive space. The company believes that it can achieve an organic compound annual growth rate between 6% and 9% for the next three fiscal years. That’s certainly not a dire outlook, considering how quickly many other companies drop guidance.

HP Inc. (HPQ)

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An old-school technology company to make this list, HP Inc. (NYSE:HPQ), rounds out this list of stocking stuffer stocks to buy. This stock is last on the list because it’s one that I’m not personally interested in. However, I see the thesis as to why some long-term investors may want to consider this company at these levels.

Like most tech or tech-adjacent stocks, HP’s stock price has been hit very hard this year. Down more than 25% on a year-to-date basis alone, HPQ stock is one that’s not necessarily a momentum stock investor may want to hold in this environment. Should the economy slow, the PC and hardware market may continue to decline.

That said, this is a company that’s also trading at less than 10 times earnings, with intriguing exposure to the IT, hybrid cloud, and software solutions markets.

Buffett’s holdings of HPQ account for roughly 1% of his portfolio, worth around $3.4 billion.

On the date of publication, Chris MacDonald has a position in AAPL. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.

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