HomeMarket NewsTime-Tested Gems: Buffett's Winning Trio Worth a Second Glance

Time-Tested Gems: Buffett’s Winning Trio Worth a Second Glance

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Warren Buffett, the Oracle of Omaha, has crafted a legacy as an astute investor, shaped by decades-long experience predating even his stewardship of the conglomerate Berkshire Hathaway. While he is not infallible, his portfolio offers a fertile hunting ground for those seeking a spark of inspiration.

Within Berkshire Hathawayโ€™s treasure trove lies a trio of stocks that have weathered the test of time and continue to beckon with alluring prospects.

Letโ€™s delve into each contender to uncover the compelling reasons why investors should consider welcoming them into their portfolios.

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Image source: Getty Images.

Unveiling the Iconic Refreshment: Coca-Cola

Coca-Cola (NYSE: KO) stands tall with a global mantle of brand recognition. Familiar to many for its array of beverages, including Coca-Cola, Sprite, and Fanta, the companyโ€™s offerings extend beyond the realm of soda to encompass water, juice, sports drinks, coffee, and plant-based concoctions.

Established in the 1800s, Coca-Colaโ€™s omnipresence spans over 200 countries. With such a broad footprint, achieving rapid growth rates becomes a Herculean task.

However, recent strides are encouraging โ€“ Coca-Cola witnessed a noteworthy 12% surge in sales last year, excluding currency translations and acquisition impacts. This upswing was fuelled by both higher prices and amplified volume.

Coca-Cola doesnโ€™t just offer beverages; it offers investors alluring dividends. The stalwart has upped its payouts for an impressive 60 years running, attaining the esteemed title of Dividend King. In a recent move, the quarterly dividend was boosted by 5.4% to $0.485.

Bolstering its appeal further, the company generates substantial free cash flow, clocking in at $9.7 billion against dividends tallying $8 billion last year. Sporting a 3.2% dividend yield, Coca-Cola eclipses the S&P 500โ€™s 1.4% dividend offering.

The Moat of Moodyโ€™s: A Fortress with Dual Strongholds

Moodyโ€™s (NYSE: MCO) boasts a dual-pronged business comprised of a renowned ratings arm and a robust analytics division.

The ratings segment, focusing on analyzing diverse debt securities, may witness fluctuations tied to bond issuances. Yet, with limited competition and a significant market share, Moodyโ€™s ratings business stands firm against rivals like S&P Global and Fitch Ratings.

Meanwhile, the analytics business equips clients with a suite of data, analytical tools, and software to manage risks in an increasingly data-dependent business landscape.

On the financial front, Moodyโ€™s charted an 8% revenue climb to $5.9 billion, accompanied by a 17% rise in earnings per share (GAAP), totaling $8.73. The management anticipates a further EPS surge of 8% to 17% this year.

Although Moodyโ€™s stock might not strike bargain-hunters with a P/E ratio of 44, well above the S&P 500โ€™s 28, the companyโ€™s sturdy businesses, promising outlook, and commanding market positions warrant a premium valuation.

DaVita: Navigating the Currents of Healthcare with Elegance

DaVita (NYSE: DVA), a key player in U.S. dialysis provision, perches atop the healthcare landscape with its focus on treating kidney disease.

With over 556,000 U.S. patients battling end-stage kidney disease in 2021, witnessing an annualized growth rate exceeding 3% over the past decade, DaVita holds a coveted position in the market.

Serving around 7.3 million patients, close to 93,000 daily in Q4, DaVita charted a 7.8% revenue surge to $3.1 billion. Anticipating a 5% to 14% increase in adjusted operating income this year, DaVitaโ€™s adjusted operating income totaled $1.7 billion in 2023.

While DaVitaโ€™s shares soared by over 77% in the past year, the stockโ€™s valuation remains reasonable, sporting an 18 P/E ratio that falls markedly below the S&P 500 multiple. With a bright future on the horizon, DaVita beckons as a tantalizing investment prospect.

As Warren Buffett sagely remarked, investing entails acquiring a slice of a business. Coca-Cola, Moodyโ€™s, and DaVita stand tall in their respective domains, presenting compelling long-term investment opportunities.

Should the siren call of Coca-Cola beckon with investment worthiness?

Before delving into Coca-Cola shares, ponder this:

The Motley Fool Stock Advisor analyst ensemble has pinpointed the 10 best stocks they believe hold the key to investor fortunes, with Coca-Cola conspicuously absent. These chosen 10 promise substantial returns in the years ahead.

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*Stock Advisor returns as of March 18, 2024

Lawrence Rothman, CFA holds no positions in the mentioned stocks. The Motley Fool has vested interests in and recommends Berkshire Hathaway, Moodyโ€™s, and S&P Global. The Motley Fool abides by a disclosure policy.

Opinions and viewpoints expressed represent those of the author and not necessarily Nasdaq, Inc.

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