Buffett's favorite stocks draw mixed earnings reviews

American Express and Coca-Cola fared well, but Wells Fargo turned in a tepid report.

By TheStreet Staff Oct 21, 2011 11:20AM

By Don Dion, TheStreet



Given the mix of winners and losers we have seen during the opening weeks of earnings season, it has likely been difficult for many stock pickers to navigate the markets without a setback. Even Warren Buffett has seen a blend of strength and weakness from the companies in his legendary portfolio.


This week has been important for fans of the Oracle of Omaha. Over the past few days, some of the largest names in the Berkshire Hathaway (BRK.A) portfolio have reported quarterly earnings and provided insight into the closing months of the year.


Of particular importance were Coca-Cola (KO), Wells Fargo (WFC) and American Express (AXP), which represent the three largest slices of the portfolio.


Buffett's portfolio casts a wide net across the broad market spectrum, offering exposure to financials, industrials, consumer goods, energy and other sectors. From an individual holdings perspective, however, the lineup is notably concentrated. Together, KO, WFC, and AXP represent nearly 60% of the total assets.


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Swirling macroeconomic turbulence appears to have had only a limited effect on consumer demand for soft drinks. Over the most recent three-month period, Coca-Cola reported earnings growth of more than 8%. A Wall Street Journal report notes that, excluding charges including restructuring costs, the company was able to outpace analyst estimates.


Despite that strength, the company recognized the road ahead is not entirely smooth with continued global economic turmoil and rising commodity costs.


Berkshire's No. 3 holding, American Express, also fared favorably over the past three months, beating forecasts.


Company executives pointed to consumer resilience as a major source of strength for the credit card giant. In a statement included in the company's earnings press release, CEO Kenneth Chenault noted that cardmember spending jumped 16% to a record level.


Looking ahead, the company appears cautiously optimistic. Economic issues remain a cause for concern. However, Chenault mentions that AXP has taken a number of steps that have improved competitiveness.


While Coca-Cola and American Express saw notable strength, Wells Fargo left something to be desired.


Interestingly, compared with other Wall Street giants, Wells Fargo appeared strong. Following the subpar performances from JPMorgan (JPM) and Goldman Sachs (GS), the company managed to report earnings in line with expectations.


Any optimism was offset by market commentators who were quick to point out the effects that looming issues facing banks are having on the company. Of particular concern was Wells' weak revenue numbers.


Shares of WFC took a heavy hit as investors steered clear of the California bank after its tepid report.

For popular Buffett stocks, the opening weeks of earnings season have been a mixed bag. In the last full week of October, investors can expect to hear from other Berkshire notables, including ConocoPhillips (COP) and Procter & Gamble (PG). The two are slated to report earnings Wednesday and Thursday.

Oct 21, 2011 12:00PM
SmileHi, I like  Buffett, he buys good blue chip stocks when they are low and holds on to them !
Oct 21, 2011 5:09PM
Buffet is a cancer.  He needs to take his money & buy a nice rest home some where far away.  This recession is nothing but a monopoly game for him & his lackies! 
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