It’s hard to call Warren Buffett anything other than the king of investing. The company of the “Oracle of Omaha”, Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) has seen his shares become the S&P500 up more than 931% since 1998. Buffett and the late Charlie Munger made this epic success by focusing on quality and value. Here are three investment options from Berkshire Hathaway’s portfolio that I think are good long-term options for any investor.
Sometimes the easiest ways are the best ways. Everyone should have one S&P500-focused index fund in their portfolio, and the Vanguard S&P 500 ETF (NYSEMKT: VOO) fits the bill. Exchange-traded funds (ETFs) like this one focus on tracking the movements of the S&P 500. This Vanguard fund is a simple and easy way to gain broader exposure to large-cap stocks in the market.
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By simply investing in the market through a tool like this, investors have passively seen their stock price nearly double over the past five years. This is perhaps the simplest and clearest investment strategy there is. Even the best hedge fund managers often struggle to outperform the S&P 500, and an ETF like this should be part of any reasonable investor’s portfolio.
My dissertation for Moody’s Corp (NYSE: MCO) is simple. The bond credit ratings industry isn’t going away anytime soon, and Moody’s is pretty much at the top of the food chain. It has outperformed the S&P 500 by 22% over the past five years, and by a much wider margin over the long term, so Moody’s just makes sense. The credit giant has had a stellar 2024 so far, with revenue up 22% year-over-year and diluted earnings per share up 32% so far in the third quarter.
For the full year, Moody’s expects diluted earnings of $10.85 to $11.05 per share. On the conservative side of those expectations, the stock is admittedly a bit pricey at more than 40 times forward earnings, but when you have such a stable and integral business, it’s hard to overlook this stock.
American Express (NYSE:AXP) tends to offer a credit card for higher income consumers. That means the business will likely continue to thrive even if we see weaker consumer trends on a broader basis.
Beyond that niche advantage – but perhaps because of it – I like American Express for its strong annual growth rates and strong expectations for the remainder of 2024. This is a stable stock. You might not see the wild performance of something like that Nvidiabut this is a company that has beaten the S&P 500 by almost 28% over the past five years.
We’ve seen three years of double-digit revenue growth, which has continued through 2024. The financial services provider reported record revenue growth for the tenth consecutive quarter, reaching $16.6 billion in revenue in the third quarter, an increase of 8% year-over-year. year. Financial trends are so positive that American Express has raised its full-year guidance to $13.75 to $14.05 in earnings per share, up from previous expectations of $13.30 to $13.80. Conservatively, this would result in the stock trading at a price-to-earnings ratio of just under 20 times earnings. According to YCharts, that is just slightly above the five-year average.
I think this is one to buy and hold. Using credit is not a fad that will go away. That makes companies like American Express very attractive to the long-term investor, and I suspect it’s also why Berkshire Hathaway has invested more than $40 billion in them.
Have you ever felt like you missed the boat on buying the most successful stocks? Then you would like to hear this.
On rare occasions, our expert team of analysts provides a “Double Down” Stocks recommendation for companies they think are about to pop. If you’re worried that you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:
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Amazon: If you had invested $1,000 when we doubled in 2010, you would have $22,292!*
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Apple: If you had invested $1,000 when we doubled in 2008, you would have $42,169!*
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Netflix: If you had invested $1,000 when we doubled in 2004, you would have $407,758!*
We’re currently issuing ‘Double Down’ warnings for three incredible companies, and another opportunity like this may not happen anytime soon.
See 3 “Double Down” Stocks »
*Stock Advisor returns October 28, 2024
American Express is an advertising partner of The Ascent, a Motley Fool company. David Butler has no position in any of the stocks mentioned. The Motley Fool holds and recommends positions in Berkshire Hathaway and Moody’s. The Motley Fool has a disclosure policy.
3 No-Brainer Warren Buffett Stocks to Buy Now was originally published by The Motley Fool
