Warren Buffett is among the best investors in stock market history, and millions of people follow his picks closely to try to find ideas for their own portfolios. Even though the overall stock market hasn't made much headway so far in 2016, the Oracle of Omaha has managed to include some solid year-to-date performers within his own holdings, as Buffett recently reported to the SEC on Form 13-F. In particular, four of Buffett's stocks have given investors strong double-digit returns in 2016, and shareholders want to know if the Buffett magic will continue. Let's take a look at these four top stocks from the Buffett list.
Energy giant Kinder Morgan (NYSE: KMI) is one of the newer additions to Buffett's portfolio, with the Oracle revealing the pick in his 13-F filing for the fourth quarter of 2015. The company sports an unparalleled network of oil and natural gas pipelines and terminals as well as carbon-dioxide transport and storage, giving it competitive advantages over smaller rivals. Yet Kinder Morgan has seen its shares slump in response to energy price declines, despite the fact that its cash flow has stayed relatively constant.
In many investors' eyes, Kinder Morgan combines good value with lucrative income opportunities, as the stock pays a healthy dividend of almost 3%. With the company having just gotten federal approval to move forward with a plan to export liquefied natural gas, Kinder Morgan also has growth opportunities. That mix provides a timely buy opportunity, and even though some doubt whether Buffett himself authorized the purchase, Kinder Morgan is worth a closer look even after its recent run-up.
Kraft Heinz, up 19%
Food giant Kraft Heinz (NASDAQ: KHC) is a newly formed company, and Buffett's position stems from his purchase of Heinz alongside partner 3G Capital. The latest move upward follows a highly successful result from the merger of Heinz with Kraft. As Buffett described it, when you look at what he paid for Heinz and also consider the money used to pay Kraft shareholders a special dividend, his cost basis on his shares of Kraft Heinz shares was less than half their value even when the merger was first completed early last year.
Unfortunately, Buffett is about to get cashed out of another lucrative investment in Kraft Heinz. This month, the food company can redeem about $8 billion in preferred shares that Buffett owns, and given their 9% interest rate, it's almost certain that Kraft Heinz will do so. Nevertheless, Buffett will retain his common stock holding, and its nearly 20% gain this year points to the health of the company and its management under 3G.
Wal-Mart, up 17%
In contrast to the two picks above, Wal-Mart(NYSE: WMT) is a longtime Buffett pick. It has also been a source of funds for Buffett, who sold off some of his Wal-Mart shares recently in order to raise cash for other purchases that he considered to be more lucrative.
Much of the share-price gains in 2016 have come in the wake of solid performance in the company's first quarter, which included earnings that topped consensus forecasts by a dime per share. Interestingly, Wal-Mart has warned that profits could remain under pressure for some time, because the retailer is investing heavily in moves designed to boost longer-term prospects and keep competitors at bay. For now, shareholders are happy with Wal-Mart, but a full turnaround will take a lot longer to complete.
USG, up 17%
Gypsum wallboard maker USG (NYSE: USG) is another longtime Buffett holding. The company makes Sheetrock drywall and other building materials, such as ceiling tile, roofing, and insulation. Having boosted his position by investing in USG corporate debt during the financial crisis, Buffett has benefited from USG's recovery since the financial crisis.
This year, USG has responded favorably to the healthy U.S. economy, which has overcome global pressures that have held back construction and building activity throughout much of the rest of the world. With the company reporting increasing demand for its products in its most recent quarter, USG is still looking like a smart Buffett pick with long-term potential.
Buffett doesn't pay much attention to short-term results, so the fact that these four stocks are doing so well for him in 2016 won't really mean much to him. Yet these stocks are worth a closer look to see if you want to add them to your investment portfolio going forward.
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Investor Warren Buffett answers reporters' questions during a press conference to announce that Walt Disney will buy Capital Cities/ABC July 31.
Billionaire investor Warren Buffett of Omaha makes a rare public appearance during an autograph session outside Borsheim's Jewelry Store in Omaha, May 4. Buffett was signing autographs for shareholders in his company, Berkshire Hathaway, which is having its annual meeting May 5.
Billionaire businessman Warren Buffett sits with his wife Susan (R) and daughter Susie, prior to the annual Berkshire Hathaway shareholders meeting in Omaha, May 5. This marks a rare public appearance for the reclusive Buffett.
Arnold Schwarzenegger, Republican candidate for governor of California
in the October 7, 2003 recall election listens as world famous
investor, Warren Buffett (L), one of his financial advisors, speaks to
reporters after a meeting of Schwarzenegger's Economic Recovery Council
in Los Angeles August 20, 2003. REUTERS/Fred Prouser
Billionaire financier Warren Buffett looks on after a meeting with U.S. Senator Arlen Specter (R-PA) and chairman of the Senate Judiciary Committee, at the Hart Senate Office Building on Capitol Hill in Washington June 29, 2005. Specter is the co-author of a bill seeking to create a $140 billion asbestos compensation fund. REUTERS/Shaun Heasley SH/TC
Billionaire Warren Buffett arrives at the Sun Valley Resort in Sun Valley, Idaho July 10, 2007. The world's biggest media chiefs gather this week at the 25th annual Allen & Co. conference at the resort starting today. REUTERS/Rick Wilking (UNITED STATES)
Warren Buffett, chairman and CEO of Berkshire Hathaway, speaks at a Senate Finance Committee hearing about "Federal Estate Tax: Uncertainty in Planning Under the Current Law" on Capitol Hill in Washington, November 14, 2007. Billionaire Buffett warned of widening U.S. income disparity and endorsed the estate tax as a check on wealth accumulation, while two senior lawmakers said they want the tax repealed. REUTERS/Jason Reed (UNITED STATES)
Billionaire financier and Berkshire Hathaway Chief Executive Warren Buffett greets shareholders during the Berkshire Hathaway Annual Shareholders meeting in Omaha, Nebraska May 3, 2008. REUTERS/Carlos Barria (UNITED STATES)
Billionaire investor Warren Buffett laughs as he appears with Microsoft Corporation founder Bill Gates for a town hall style meeting with business students broadcast by financial television network CNBC at Columbia University in New York, November 12, 2009. REUTERS/Mike Segar (UNITED STATES BUSINESS)
Berkshire Hathaway Chairman Warren Buffett kisses his ukulele at the Berkshire Hathaway annual meeting in Omaha May 1, 2010. Buffett played "I've Been Working on the Railroad." REUTERS/Rick Wilking (UNITED STATES - Tags: BUSINESS TRANSPORT)
Billionaire financier and Berkshire Hathaway Chief Executive Warren Buffett (L) and Microsoft founder Bill Gates gesture at the national launch ceremony for the BYD M6 vehicle in Beijing September 29, 2010. Chinese battery and car maker BYD, backed by Buffett, launched its first premium multi-purpose vehicle (MPV) in Beijing on Wednesday to tap rising demand in the world's biggest auto market. REUTERS/Jason Lee (CHINA - Tags: TRANSPORT BUSINESS)
Billionaire Warren Buffett, wearing a traditional tikka or a red mark on the forehead, speaks during a news conference in Bangalore March 22, 2011. Buffett on Tuesday said he is looking to invest in large countries like India, China and Brazil, but added that restrictions on foreign ownership in India's insurance industry could be a deterrent. Buffett also said and the U.S. economy was improving and that the devastating earthquake in Japan would not hurt global growth. REUTERS/Stringer (INDIA - Tags: BUSINESS)
Berkshire Hathaway Chairman Warren Buffett tours the floor of the New York Stock Exchange September 30, 2011. REUTERS/Brendan McDermid (UNITED STATES - Tags: BUSINESS)
Berkshire Hathaway chairman Warren Buffett holds his hand over his heart during the singing of the national anthem, at the start of a 5km race sponsored by Brooks Sports Inc., a Berkshire-owned company, in Omaha May 5, 2013, a day after the company's annual meeting. Buffett at the meeting on May 4, 2013 gave the most extensive comments to date about the future of Berkshire Hathaway Inc after he is gone, saying he still expects the conglomerate to be a partner of choice for distressed companies. REUTERS/Rick Wilking (UNITED STATES - Tags: BUSINESS SPORT ATHLETICS)
Warren Buffett, Chairman of the Board and CEO of Berkshire Hathaway, poses for a portrait in New York October 22, 2013. REUTERS/Carlo Allegri (UNITED STATES - Tags: BUSINESS)
Roberta Buffett Elliott sits with her brother Warren Buffett as they attend an announcement ceremony at Northwestern University in Evanston, Illinois, January 28, 2015. The sister of financial investor Warren Buffett has given Northwestern University more than $100 million to create the Roberta Buffett Institute for Global Studies, the largest single gift in the school's 164-year history, the university said on Wednesday. REUTERS/Jim Young (UNITED STATES - Tags: BUSINESS EDUCATION SOCIETY)
Warren Buffett, chairman and CEO of Berkshire Hathaway, speaks at the Fortune's Most Powerful Women's Summit in Washington October 13, 2015. REUTERS/Kevin Lamarque/File Photo
Warren Buffett, chairman and CEO of Berkshire Hathaway, smiles before speaking with Bill Gates (not pictured), at Columbia University in New York, U.S., January 27, 2017. REUTERS/Shannon Stapleton