The 3 best Warren Buffett stocks for November

With a net worth of 104 billion. US dollar (as of 4. November) Warren Buffett is probably one of the greatest investors of all time. Since 1995, his company, Berkshire Hathaway (WKN: A0YJQ2 ), has given investors a remarkable average annual return of 20% (that of the S&P 500 was only 10.2%). And even though he's 91 years old, there's no sign he's losing his touch.

4 "inflation-proof" stocks to buy today! No doubt, inflation is soaring. Investors are unsettled. Money that just sits in the bank loses value year after year. But where should you invest your money? Here are 4 stock favorites from The Motley Fool's editors that you can invest in as inflation rises. We have some of the most profitable stocks of this generation like Shopify (+ 6.878%), Tesla (+ 10.714%) or MercadoLibre (+ 10.291%) recommended early on. Hit these 4 stocks while you still can. Just enter your email address below and request this free report immediately. Request the free analysis now here.

What makes it special is that over the years, it has adhered to a few investment principles when looking for companies to invest in. It looks for companies with a strong moat, competitive advantages, a wide margin of safety and shareholder-friendly management. In addition, they hold their companies for a long time.

While we can't all become mini-Buffetts, we can learn from him and take advantage of the companies he invests in for our own portfolios. Three Motley Fool staffers took a close look at his portfolio and picked three of Buffett's stocks to invest in during November. Let's take a look at why they recommend Moody's (WKN: 915246 ), the SPDR S&P 500 Trust ETF (WKN: 898706 ) and Berkshire Hathaway itself.

Rating superstar with huge moat

Eric Volkman (Moody's Corporation): There are many stocks in Berkshire's equity portfolio that are constantly in the headlines. But Moody's Corporation is different. And like many good stocks that aren't on everyone's radar, Moody's has great potential for investors of all stripes.

One investment principle Buffett firmly believes in is that of the so-called moat. It has a bias toward companies operating in industries with high barriers to entry. Moody's meets this criterion because it is one of only three major rating agencies in the market (along with S&P Global's Standard & Poor's Global Ratings and Fitch Ratings).

Rating agencies assess the investment worthiness of corporate and public-sector debt instruments such as bonds. These ratings are crucial for investors, especially since many institutions only buy debt above a certain rating threshold.

Interest rates are at historic lows (at least for now), which means a lot more borrowing is happening because debt is relatively cheap.

Combine this with the austerity brought on by the Corona virus outbreak, and many companies are lining up to borrow money. According to a study by Deloitte, total corporate debt increased 9% year-over-year in 2020. At the end of this year, the total amount of borrowing by non-financial companies in this country was about $17.7 trillion. This means a lot of work for the rating specialists.

Moody's takes advantage of this as usual. Moody's Investors Service (MIS) – the company's central ratings department – took in 925 million in the third quarter alone. U.S. dollars taken in, a strong 12% increase over the previous year.

Interest rates won't stay low forever, especially considering that inflation is just about to take over. But even if interest rates rise, they will still be low by historical standards, and companies will continue to borrow money.

Moreover, assessing corporate credit is not Moody's only activity. The company's second component, the business intelligence unit Moody's Analytics, has also achieved encouraging growth rates. In the third quarter, the department's revenue rose 13% to 601 million. U.S. dollars. In five years, this figure has almost doubled; in comparison, MIS revenues rose by "only" 51 %.

Moody's is one of the top-performing companies that has modest expenses compared to its revenues. In the said third quarter, net income was 474 million. US dollars on sales of 1.53 billion. U.S. dollar. This was no accident – if we look at the company's last four fiscal years, net margins were similarly healthy, ranging from 24% to 33%.

And finally, Moody's regularly pays out money to its shareholders. At just 0.6%, the payout is not a high-yield dividend, but it is consistent and reliable. The company pays them out every quarter and raises them regularly (and generously) every year.

The ultimate in conservative investing?

Chuck Saletta (Berkshire Hathaway): As CEO of Berkshire Hathaway, Warren Buffett has built his own mini-economy. Power generation and transmission, transportation of goods and services, food, clothing, shelter, insurance, and much more – all combined in a single business conglomerate. As if that weren't enough, the company is regularly criticized for having too much cash. This can be tough during times of inflation, but is an advantage when the economy falters.

Most of these fairly defensive businesses are subsidiaries of Berkshire Hathaway. This means that you can only participate in them if you buy the parent company. And all that cash? Now, that continues to stack up as these subsidiaries generate more and more of it. Can too much cash be a problem? Absolutely – but it's definitely a luxury issue.

As if that weren't enough, investors can buy shares of Berkshire Hathaway for just over 19 times the company's expected earnings. That is a little more favorable than the total estimate of the S&P 500 of over 21. This makes the company a relative bargain despite its incredibly strong financial position.

Of course, Berkshire Hathaway is so defensively positioned that it is not expected that the company will have incredible growth. However, it should be borne in mind that this means that the entire expertise of Buffett and co. gets. What could possibly go wrong?

Buffett's favorite investment of all

Barbara Eisner Bayer (SPDR S&P 500 Trust ETF): there's no denying that the Oracle of Omaha is one of the world's best stock pickers of all time. Still, he doesn't recommend that most people invest in individual stocks. Instead, he has consistently argued that the best investment for individual investors is an index fund or exchange-traded fund (ETF) that tracks the S&P 500 index.

Back in 2013, Buffett wrote in his annual letter to shareholders, "The layman's goal should not be to pick winners, but rather to own a cross-section of companies that, taken as a whole, are sure to do well."A low-cost S&P 500 index fund will achieve this goal. And just recently, at the 2021 annual meeting, Buffett said, "There are great arguments for index funds. If you only had one diversified group of stocks, U.S. stocks, I would prefer that and hold it over a 30-year period."

What exactly is this investment instrument that Buffett is so enthusiastic about?? As the name implies, an index fund tracks a specific index and is available in a variety of asset classes (small-cap, mid-cap, large-cap), sectors (from healthcare to cryptocurrencies), and domestically and internationally. ETFs are traded like a stock and can be bought and sold at any time.

Buffett, however, prefers the S&P 500 index because it contains 500 of the largest U.S. companies and has given investors an average annual return of 10% over the long term. By buying an index fund like this, you get instant diversification and the ability to invest without having to pay attention to what's happening in the stock market every day.

Does Buffett live up to his promise? In any case! As of August 2021, he owned two index funds in Berkshire Hathaway's portfolio: the SPDR S&P 500 Trust ETF and the Vanguard S&P 500 ETF (WKN: A1JX53 ).

Buffett is actually huge on index funds: when he dies, he wants 90% of his estate to be invested by his wife in an S&P index fund (with the remaining 10% going into Treasury bills).

If you want to invest like Buffett, follow his advice. So: Buy an S&P index fund and hold it for the long term. This is the best and most consistent investment. In any case, it is suitable for Buffett – and there is a lot to be said for it.

There's one company whose name is coming up very, very frequently among The Motley Fool analysts right now. It's THE top investment for us in 2022.

You could also benefit from. To do that, you first need to know everything you can about this unique company. That's why we've now put together a free special report detailing this undertaking.

Barbara Eisner Bayer owns shares of Apple and Berkshire Hathaway. Chuck Saletta does not own any of the stocks listed. Eric Volkman owns shares of Apple. The Motley Fool owns and recommends shares of Apple, Berkshire Hathaway, Moodys, S&P Global and Vanguard S&P 500 ETF. This article appeared on 7.11.2021 on Fool.com and has been translated for our German readers.