It’s highly unlikely that we’ll encounter another investor as gifted and influential as Warren Buffett. Known for his extraordinary talents, he transformed the then-struggling textile company, Berkshire Hathaway, in 1965, into a colossal conglomerate, with interests spanning across various sectors such as insurance, healthcare, finance, automotive, consumer goods, and many more.
At age 94, Buffett is set to retire from Berkshire Hathaway at year’s end, leaving behind an impressive legacy. It will be hard for anyone to match his consistent returns: an average annual growth of 19.9% since 1965, which almost doubled the performance of the S&P 500 over the same period. Under Buffett’s leadership, Berkshire Hathaway amassed a total gain of 5,502,284%, whereas the S&P 500 only increased by 38,054% during that time span.
He invests in robust, top-tier companies that consistently excel within their industries and have predictable earnings, competent leadership, strong competitive advantages, and preferably offer dividends. Buffett is also known for his long-term investment strategy, often holding onto his investments for years, sometimes even decades.
To emulate Warren Buffett’s investment style, consider these two stocks found within Berkshire Hathaway’s portfolio as solid options: Amazon (symbol AMZN) and Pool Corporation (symbol POOL).
1. Amazon
“Amazon is among the largest corporations globally, boasting a market capitalization of approximately $2.4 trillion. Given its status as part of the elite group of seven stocks, often referred to as the ‘Magnificent Seven’, Amazon can undeniably be classified as a Buffett stock. This is due to its exceptional management team and formidable competitive advantage, which encompasses its thriving e-commerce sector and Amazon Web Services (AWS) in cloud computing.”
Nonetheless, it took Buffet some time to comprehend the true nature of Amazon. In 1994, he had the opportunity to invest in Amazon, well before its initial public offering. However, he chose to decline, viewing Amazon as nothing more than an online bookseller.
Berkshire Hathaway waited until 2019 before investing in Amazon, expressing regret that they didn’t invest sooner. However, it’s important to note that Warren Buffett isn’t alone in failing to anticipate Amazon’s growth potential.
Today, AWS stands as the premium choice. Indeed, its e-commerce sector raked in an impressive $92.88 billion in the initial quarter, but it’s essential to note that this business comes with substantial operational costs. E-commerce expenditures amounted to a hefty $87 billion, resulting in an operating income of merely $5.84 billion.
In the recent quarter, AWS brought in approximately $29.26 billion in revenue, with costs totaling only $17.72 billion. This difference resulted in an operating income of around $11.5 billion from AWS, accounting for the majority of Amazon’s profits during this period.
Amazon’s (AMZN) stocks are expected to keep climbing due to AWS, demonstrating that even an investor as astute as Warren Buffett isn’t always right. However, it seems he has recently invested in the company and is now enjoying the returns from his investment.
2. Pool Corp.
Pool Corp. functions as a large-scale distributor for various pool-related items, including equipment, components, and accessories. They offer new swimming pool installations, replaceable parts, fencing solutions, pool maintenance products, and hot tubs. The company boasts approximately 125,000 clients who purchase goods in bulk to manage their own pool-oriented businesses or to retail them to individual consumers.
The business operates approximately 445 retail outlets across North America, Europe, and Australia, offering over 200,000 different products as part of its range.
Berkshire Hathaway entered a new investment in Pool Corporation during the third quarter of 2024, marking their first purchase of the company’s stock. Upon closer examination, it becomes clear why this company piqued Warren Buffett’s interest.
Buffet values companies that consistently earn profits and have a robust business strategy, and Pool Corp. fits the bill perfectly. According to their statement, 14% of their business stems from new construction projects, while 22% is generated through renovations and remodeling. The remaining 64% comes from fees associated with routine maintenance and repairs.
Essentially, whenever Pool Corp. completes a sale and installation of a swimming pool, they gain an advantage in terms of managing its daily upkeep and repairs. Plus, they can capitalize on selling associated products. This continuous income source is quite appealing to potential investors.
As an excited investor, I’m thrilled about Pool Corp.’s 2025 earnings outlook! They’ve projected their earnings to be between $11.10 and $11.60 per share, which is a promising range. But that’s not all – they also promise a steadily increasing dividend, delivering a generous yield of 1.7%. This income stream adds an extra layer of appeal to my investment strategy!
This year, Pool Corp.’s shares have dropped by 14% due to increased interest rates causing delays in significant construction projects. However, given that Pool Corp. has a steady income source and offers a substantial dividend return, purchasing the stock at its current discounted price could be an excellent long-term investment opportunity.
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2025-07-20 10:45