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 Hathaway’s treasure trove lies a trio of stocks that have weathered the test of time and continue to beckon with alluring prospects.
Let’s delve into each contender to uncover the compelling reasons why investors should consider welcoming them into their portfolios.
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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 company’s offerings extend beyond the realm of soda to encompass water, juice, sports drinks, coffee, and plant-based concoctions.
Established in the 1800s, Coca-Cola’s omnipresence spans over 200 countries. With such a broad footprint, achieving rapid growth rates becomes a Herculean task.
However, recent strides are encouraging – 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 doesn’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 500’s 1.4% dividend offering.
The Moat of Moody’s: A Fortress with Dual Strongholds
Moody’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, Moody’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, Moody’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 Moody’s stock might not strike bargain-hunters with a P/E ratio of 44, well above the S&P 500’s 28, the company’s sturdy businesses, promising outlook, and commanding market positions warrant a premium valuation.
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, DaVita’s adjusted operating income totaled $1.7 billion in 2023.
While DaVita’s shares soared by over 77% in the past year, the stock’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, Moody’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:
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Lawrence Rothman, CFA holds no positions in the mentioned stocks. The Motley Fool has vested interests in and recommends Berkshire Hathaway, Moody’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.
