These Are 2 of Warren Buffett's Favorite Stocks. Here's What They Just Told Investors.

Warren Buffett is a voice of stability and reason in a market that's often volatile and unreasonable. In the nearly 60 years he's headed Berkshire Hathaway , he's beaten the market by espousing steady and rational, if sometimes unconventional, investing strategies. Berkshire Hathaway has outperformed by a staggering margin: a 4,384,748% gain for Berkshire Hathaway versus 31,223% for the S&P 500 as of the end of 2023.

Buffett doles out his investing nuggets freely and has made no secret as to why he loves Coca-Cola (NYSE: KO) and American Express (NYSE: AXP) . They're his longest-held stocks, and he's said, as recently as this year, that he'd never sell them. Both of these Buffett favorites just updated investors with important information. Here's what they said.

Coca-Cola is the king of beverage stocks

Investors were worried after PepsiCo gave a lukewarm earnings report a few weeks ago, but Coca-Cola's update was strong, and it once again demonstrated why it's a rock-solid consumer staples giant.

Revenue increased 3% year over year in the 2024 second quarter, but organic revenue was up 15%. The organic number accounts for acquisitions and divestments and gives a clearer picture of general operations and consumer trends, though on a non-GAAP basis.

Management provides similar adjusted numbers for operating margin and earnings per share (EPS). The generally accepted accounting principles (GAAP) operating margin and comparable operating margin both expanded year over year in the quarter, but while GAAP EPS declined 5%, comparable EPS increased 7%. Management raised guidance across the board for the full year after this strong report. It expects organic revenue growth of 9% to 10% and comparable, currency-neutral EPS growth of about 14%.

Keep in mind that these numbers are high despite the inflationary environment, and it's doubly impressive considering that they're higher than pre-pandemic growth levels. Coca-Cola is leveraging its global distribution network and corresponding data to generate higher sales and become more efficient. Although it seems that every company is trying to use the artificial intelligence (AI) buzzword to create some excitement, Coke's use of its data to provide clear and accurate recommendations for local distributors based on local consumer habits is leading to higher sales and profits. Management believes it's just "scratching the surface" of this opportunity, and more pinpointed recommendations could lead to serious efficiencies and sales increases.

It all leads into the soft beverage maker's model of beverage innovation, cash creation, and funding its legendary dividend. The dividend yield is slightly below the average 3%, since Coca-Cola stock has been gaining on its fabulous performance. Coca-Cola is a solid anchor stock for any portfolio, and even more so for passive income investors. It's no wonder Buffett keeps holding on.

American Express' premium model is resilient

Just like Coca-Cola continues to be a favorite in global beverages, American Express is picking up fans for its premium credit cards across demographics. It's no clearer than at a time like now, when many Americans are feeling pressure, yet the company continues to gain members, increase sales, and squeeze out high profits.

Revenue increased 8% year over year in the second quarter, and EPS increased from $2.89 last year to $4.15 this year. EPS included the sale of Accertify, but even the adjusted number excluding the gain was $3.49, a 21% increase over last year and well ahead of Wall Street estimates .

Management raised guidance for full-year EPS from $12.90 to $13.50, although it's keeping revenue guidance at about 10%. It's so confident in its profit generation that it feels it can spend more of its money on marketing without dipping into the Accertify proceeds and still increase net income.

American Express is a closed-loop financial company, which means it acts as its own issuing bank. It offers a robust rewards program and charges fees for its premium credit cards. The fees alone account for a large portion of net income, similar to the Costco retail model. Fee income increased by double-digits for the 24th consecutive quarter, up 16%, and it accounts for a large portion of total net income -- $2.1 billion out of $3 billion in the second quarter.

Although they operate different business models in different industries, there are some similarities between American Express and Coca-Cola that give investors a clear view into what Buffett values. American Express plays a large role in the global economy and customers love its products. It runs efficiently and is highly profitable, and it shares its cash with shareholders. American Express' dividend isn't as attractive as Coke's, only yielding about 1.1% right now, but it's growing much faster. Shareholders can count on American Express to add value and passive income for many years.

American Express is an advertising partner of The Ascent, a Motley Fool company. Jennifer Saibil has positions in American Express. The Motley Fool has positions in and recommends Berkshire Hathaway and Costco Wholesale. The Motley Fool has a disclosure policy .