3 Warren Buffett Stocks to Buy Right Now for Under $1,000

Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) CEO Warren Buffett is a legend in the investment world. Since taking the top job at Berkshire Hathaway in 1965, Buffett has delivered compound annual returns of nearly 20%. In other words, if you had invested $100 in the conglomerate when Buffett took over and didn’t touch it, that investment would be worth more than $5.6 million today.

Buffett’s success comes because he and his team at Berkshire invest in quality companies with solid competitive advantages, including strong brands and high barriers to entry. It also takes a long-term approach to investing, buying companies it believes can grow over the next decade and holding on to those winners that continue to produce.

Berkshire Hathaway has a large portfolio of stocks that meet these criteria and form a pool for investors to choose from. If you have $1,000 to invest today, here are three great Buffett stocks you can buy and hold for the long term.

Image source: The Motley Fool.

American Express

American Express (AXP -0.01%) has a long history of excellent performance due to its strong brand. Despite competition from Visa, MasterCardand the banks that issue cards through them, American Express has stood firm because of its branding, which customers associate with luxury.

In an interview with Bloomberg several years ago, Buffett said he “could do all kinds of things with hundreds of billions of dollars, but I can’t put into people’s minds what they have into their minds about American Express.”

This strong brand is why American Express has been a staple in Berkshire Hathaway’s portfolio for over 30 years. Since 1995, Berkshire’s stake in the credit card company has grown from about $1.3 billion to $35.1 billion, or a 27-fold increase.

American Express and its strong brand benefit from a growing US economy, but they can also benefit during inflationary times as rising prices mean higher spending for consumers. They also get higher interest rates, which allow them to earn more interest on their credit card loans.

Not only that, but its robust customer base can withstand economic downturns better than competitors, which is why the company continues to thrive today.

Chubb

Warren Buffett has been a big fan of investing in insurance companies since his days as a student at Columbia Business School. At the time, Buffett learned under Benjamin Graham, who invested in GEICO in 1948, one of the best-performing investments of Graham’s career.

Berkshire Hathaway acquired GEICO in 1995, but continues to add insurance companies to its investment portfolio. Chubb (CB 0.20%) is one of its recent acquisitions, with Berkshire Hathaway amassing more than 27 million shares in the property and casualty insurer over the past year.

What makes Chubb attractive is its disciplined underwriting and strong cash flows. Over the past two decades, Chubb has demonstrated excellent underwriting — an extremely important skill to have in the highly competitive insurance industry. The company has consistently beaten its peers, which translates directly into cash flow, some of which fuels dividends, which it has collected for 31 consecutive years.

Chubb is a solid company that should continue to grow as the global economy grows. It should also benefit as customers seek to protect themselves from growing risks, including those from climate-related catastrophes and evolving cybersecurity threats.

Moody’s

When a company issues debt, investors want to understand how risky the debt is and how likely the company is to be able to repay it over time. That’s where the rating agencies are Moody’s (MCO -0.67%)Enter.

Moody’s is the second largest credit rating agency in the United States, with a market share of 32%. Only S&P Global has a higher market share at 50%. Difficulty breaking into the credit rating industry, due to regulations and investor confidence, makes Moody’s a strong company with a robust competitive advantage.

Over the past few years, the company has been hampered by the higher interest rate environment, which has put pressure on corporate debt issuance in the US. Those headwinds look set to change now, with the Federal Reserve cutting its benchmark interest rate by 50 years. points in September.

Moody’s has already seen an increase in issuance volumes. In the first half of this year, adjusted operating income for Moody’s Investor Services (where it represents its rating business) rose 51% year over year. The Fed’s first interest rate cut of 2020 should spur more demand for corporates looking to issue debt and do deals.

With a robust economic moat, the company is positioned to benefit from pent-up demand for debt issuance and should continue to be a major player in the capital markets for years to come.