A beaten-down with a massive competitive moat is usually a good stock to buy. Warren Buffett has made himself and the investors in Berkshire Hathaway (NYSE: BRK. A) (NYSE: BRK.
B) very wealthy by identifying companies trading at great value relative to their long-term outlook. Often times, political and economic environments will dull the near-term outlook for a.
Those are often opportunities for Buffett, particularly if he can identify impacted es that exhibit wide competitive moats. You can see that in some of Buffett's most recent purchases.
For example, he has invested heavily into Constellation Brands (NYSE: STZ), which distributes some of the most Mexican beer brands in the U.
Import tariffs threatened its core, but it saw some relief as the tax on alcohol has been waived (but not the tax on the aluminum cans the drinks come in).
Over the long run, however, it should be able to keep growing, making it a smart investment for those willing to buy and hold.
But another Buffett investment looks even better value with a decade-low earnings multiple and an even stronger and competitive moat.
Here's the Buffett stock value investors should buy now and hold forever. Image source: The Motley Fool.
The stock to buy in the face of growing uncertainty President Donald Trump's tariffs are a threat to any company relying on importing ducts into the United States.
With a rise in costs for distributors or retailers, imports are set to see a rise in price to help offset those tariffs.
While most of them are currently paused, the Trump tariffs are set to go into effect on July 9.
That's bad news for companies that don't have much pricing power versus comparable low-cost replacements from domestic viders.
But companies with unique ducts, brands, or limited domestic competition will fare much better in the face of Trump's tariffs. That's why Diageo (DEO -0.
81%) looks a great opportunity for investors right now. Diageo is the company behind brands including Johnnie Walker, Tanqueray, Ketel One, Don Julio, and many other premium spirits.
It's also the of Guinness, the iconic Irish stout. Its portfolio includes over 200 brands, and its sales span 180 countries. However, 39% of the company's sales were in North America last year.
That means tariffs will take a big bite out of its. Management estimates the 10% tariff will cost the company $150 million per year. As such, distributors imported additional units into the U.
Last quarter, artificially inflating its net sales growth to 5. 9% year over year.
Investors should expect margin deterioration this quarter, management says, but sales growth may only fall back modestly. In other words, management is weathering the storm pretty well.
The damage would be far worse if it weren't for the strength of Diageo's brands and its competitive position. The wide moat keeping spirits up Diageo's biggest moat comes from its brand names.
While its portfolio spans all s of price points, it has put a significant focus more recently on acquiring and building premium brands.
Not only does that give it more leeway to increase prices (since it doesn't compete on price), it also plays into the trend for drinkers focusing on higher quality spirits.
Diageo's whisky brands Johnnie Walker and Lagavulin benefit from the limited locations for scotch duction.
And it's tough for new competitors to enter the market because the aging cess is an important factor for spirits scotch, especially on the high end.
Johnnie Walker Blue is a blend that includes rare whiskys aged as long as 60 years. In other words, there aren't very many replacement ducts for Diageo's spirits.
That's further supported by management's expectations to exhibit operating leverage in 2026 and beyond, which should result in strong earnings growth.
Even with mid-single-digit revenue growth, earnings per should grow closer to 10% when combined with its repurchase gram. Management will pay a growing dividend each year on top of that.
And with s trading at a price-to-earnings ratio of just 15. 6, near a decade low, the stock looks an absolute bargain right now. Adam Levy has positions in Diageo Plc.
The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool recommends Constellation Brands and Diageo Plc. The Motley Fool has a disclosure policy.