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Warren Buffett has built his reputation — and a fortune — on a simple idea: buy great companies at fair prices and hold them for as long as possible. In fact, he once famously remarked that his favorite holding period is forever.
The strategy has worked wonders. Since 1965, as chairman and CEO of Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B), Buffett has delivered a compounded annual gain of nearly 20%, compared with about 10% from the S&P 500 over the same stretch. That’s nearly 60 years of outperformance.
To see the philosophy in action, just look at Coca-Cola, a stock Buffett scooped up in the late 1980s and still owns today. It’s paid him billions in dividends over the decades.
So, which companies might be the next Coca-Cola — Buffett stocks to hold forever? Two stand out today: Amazon and American Express.
1. Amazon: The Mistake Buffett Was Big Enough to Correct
Even the Oracle of Omaha can miss one. Buffett has openly called his failure to buy Amazon (AMZN 1.46%) in its early days a huge mistake. But in 2019, one of his investment managers decided it was “better late than never” and added the tech behemoth to Berkshire Hathaway’s portfolio.
That decision has paid off handsomely, with Amazon shares soaring over 100% since. And the growth story is far from over.
While you know Amazon for its e-commerce empire, its real engine of profitability is Amazon Web Services (AWS), the undisputed global leader in cloud computing. Now, Amazon is tapping into its next trillion-dollar opportunity: artificial intelligence (AI). AI is already supercharging efficiency in its retail operations and fueling a new suite of powerful tools for AWS customers. This AI-driven growth has helped AWS reach a staggering $123 billion annual revenue run rate. Over time, AI will continue to streamline operations and turbocharge earnings across the entire company.
Despite its dominance, Amazon is trading at a surprisingly reasonable price. At 34 times forward earnings estimates—down from over 50 last year—now is an opportune time to invest in a company leading the future of commerce and computing.
2. American Express: The Unshakeable Fortress
A cornerstone of Berkshire’s portfolio for decades, American Express (AXP 0.72%) is the definition of a business with a powerful moat. By catering to a global base of higher-income customers with a suite of premium perks, the company has built a brand fortress that competitors simply can’t breach. This has created a loyal user base and ever-growing revenues.
Far from being a legacy brand, American Express is proving its momentum with younger consumers. In its most recent quarter, a remarkable 63% of new global consumer accounts were opened by millennials and Gen Z.
The numbers speak for themselves. Revenue climbed 9% to a record $17.9 billion, card member spending hit an all-time quarterly high, and adjusted earnings per share jumped 17%. Buoyed by these trends, the company confidently reiterated its full-year guidance.
What makes American Express a particularly brilliant long-term hold is its resilience. Because its cardholders are often more affluent, they are less impacted by economic turbulence and tend to maintain their spending habits. This makes AmEx a dependable performer, even in uncertain times.
While the stock trades at 21 times forward earnings estimates—up from under 15 a year ago—it remains a reasonable price for an elite business.
As Buffett himself wrote to shareholders in 2023 about American Express and Coca-Cola: “The lesson… When you find a truly wonderful business, stick with it.”
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