Warren Buffett, often regarded as a leading figure in the investing world, leads Berkshire Hathaway, a company famous for its remarkable performance in the stock market. Since 1998, shares of Berkshire Hathaway have surpassed the S&P 500 index by over 931%, a testament to the company’s focus on quality and value investing. The following outlines three investment opportunities from Berkshire Hathaway’s portfolio that are deemed favorable for long-term investors.
### Vanguard S&P 500 ETF
The Vanguard S&P 500 ETF (VOO) represents a straightforward investment strategy by focusing on the S&P 500 index. This exchange-traded fund (ETF) offers broad exposure to large-cap stocks in the market, allowing investors to passively partake in the overall market’s performance. Over the past five years, this ETF has nearly doubled in share price, illustrating its potential as a fundamental component in any investor’s portfolio. Given the challenges hedge fund managers face in outperforming the S&P 500, this type of ETF serves as a viable option for reasonable investors.
### Moody’s
Moody’s Corp (MCO) holds a strong position in the field of bond credit ratings, a business that continues to remain essential. Moody’s has outpaced the S&P 500 by 22% in the past five years and has demonstrated even more significant gains over the long term. The company reported a successful 2024, with revenues increasing 22% year over year and diluted earnings per share rising 32% year to date through the third quarter. For the full year, Moody’s forecasts diluted earnings per share between $10.85 and $11.05. Although the stock might appear expensive at over 40 times forward earnings, the stable and indispensable nature of the business makes it an attractive option.
### American Express
American Express (AXP) predominantly offers credit cards targeting higher-income consumers, making it resilient even in weaker consumer trend environments. The company boasts strong annual growth rates and presents robust guidance for the remainder of 2024. While it may not offer the rapid growth seen in sectors like technology, American Express has outperformed the S&P 500 by nearly 28% over the last five years. With three consecutive years of double-digit revenue growth, the financial services company reported its 10th consecutive quarter of record revenue growth in 2024, achieving $16.6 billion in the third quarter, an 8% year-over-year increase. American Express has raised its full-year earnings guidance to between $13.75 and $14.05 per share, placing the stock at a forward price-to-earnings ratio slightly above its five-year average. This indicates a strong potential for long-term investors, aligning with Berkshire Hathaway’s substantial $40 billion investment in the company.
American Express, a partner of The Ascent, a Motley Fool company, is highlighted in this analysis. Note that David Butler holds no position in the stocks mentioned, although The Motley Fool possesses positions in and recommends both Berkshire Hathaway and Moody’s.
