Charlie Munger is certainly one of the generational investing icons I miss the most. His honest and frank takes at the Berkshire Hathaway (NYSE:BRK-B) annual meeting each year provided millions of investors with not only relatable wisdom, but left many with a smile on his face. As many may or may not be aware, the one year anniversary of his passing is coming up – Charlie Munger passed away at the age of 99 on November 28, 2023. 

Going to the Berkshire annual meeting this year, it was certainly a more solemn convention than in previous years, with a very nice montage of Munger’s contributions to the company I’d encourage investors to watch in retrospect. Undoubtedly, Berkshire’s vice-chairman contributed a great deal to the success of the company, and to current CEO Warren Buffett’s investing philosophy and mindset.

Buffett continues to focus on high-quality businesses with the potential to thrive long-term, but Munger has been apt at sniffing out such companies as well over time. Here are three of his best picks I still think have plenty of potential for upside moving forward, and why investors may want to consider these names moving forward. Many of these are stock picks attributed to Munger, or his own picks made via his own holding company, Daily Journal, over the years.

Key Points About This Article:

• Charlie Munger was a generational investing giant, having shaped the way many current value investors think about how to allocate capital within their portfolios.
• As we approach the one year anniversary of his passing, let’s dive into three of his best long-term picks for those looking for stock ideas right now.
• If you’re looking for some stocks with huge potential, make sure to grab a free copy of our brand-new “The Next NVIDIA” report. It features a software stock we’re confident has 10X potential.

Berkshire Hathaway (BRK-B)

No list of Charlie Munger stocks would be complete without discussing his primary concern in recent decades – Berkshire Hathaway.

Charlie Munger served Berkshire as its vice chairman from 1978 until his passing, leaving behind an incredible legacy and providing influential input with respect to how Berkshire organized its holdings over time. With more than 4,000 shares of Berkshire Class A stock in his portfolio at the time of his death, Munger would have been worth more than $2.7 billion on these holdings alone, excluding the other investments he made over his lifetime. That’s the value of compounding, and Munger’s contributions over many decades would certainly be worth such a sum to many Berkshire investors.

Berkshire Hathaway’s recent moves have mostly been in the selling column of late, something Munger would likely agree with. And one would have to speculate about how Charlie Munger might want to invest the company’s growing cash pile of nearly $300 billion at present. This amount of cash certainly provides the company with immense financial flexibility, and should allow Berkshire to capitalize on future buying opportunities, if the market does indeed take a large dip, as Buffett seems to think is likely.

Costco (COST)

Costco (NASDAQ:COST) has been another top pick Charlie Munger has continued to pound the table on for many years, and is one he’s owned rather consistently in his own portfolio for a very long time. This pick has been stellar, and investors simply need to look up any long-term chart of Costco’s stock price to see how profitable this investment has been.

The company is known for its steady growth, even during recessions, making Costco a top pick in this current climate for those looking fore defensive exposure. Coscto’s success can largely be attributed to a membership model, bulk sales, and low markups leading to strong market share gains over the years. With a 90%+ global renewal rate and strong profitability, the company continues to attract new members and remains a stock I continue to kick myself for not owning – it just never seems to become “cheap” on a relative level, and that’s probably for good reason.

Roughly half of Costco’s profits come from membership fees, allowing the grocery giant to sell quality goods at discounted prices, securing customer loyalty with 90%+ renewal rates. Recent sales trends show improvement, strong sales growth coming in despite inflationary pressures. Indeed, other retailers haven’t seen Costco’s ability to maintain margins to the same extent, and I think the company’s business model (which Munger bet on for years) should provide similar competitive advantages moving forward. On any serious dips, this is a stock I seriously want to buy.

BYD Co. (BYDDF)

As far as I’m concerned, BYD Co. (OTC:BYDDF) could be among Charlie Munger’s best long-term picks. The Chinese EV maker has continued to be among his top picks at his Daily Journal annual meetings. In fact, at one of his more recent meetings, he suggested to the audience that “I would say that I’ve never helped do anything at Berkshire that was as good as BYD — and I only did it once.”

That’s Munger’s humility for you. Undoubtedly, he impacted many more investment decisions than just this one. But not only has Munger been directionally correct on BYD, one of the best-performing Chinese stocks this past decade, this pick has been an absolute winner. Since BYD went public in 2009, its stock price is up more than 1,300%. That makes for one of the best long-term growth trajectories of any of his picks, and is due to a number of key factors.

BYD has recently become the global leader in EV sales, serving a high-growth Chinese EV market that’s now seeing more than 50% market penetration for new EV sales relative to internal combustion engine vehicles. If this trend continues, and the economy moves to an entirely electric-focused future, BYD could be a much bigger winner than Tesla or other players in this space. Considering the company’s core technology with its current models, and its pace of innovation, this is a name I think is worth owning at its current multiple.

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