2 Warren Buffett-like stocks to buy long-term

Some investors like to follow in Warren Buffett’s footsteps and buy the same stocks as him. It’s no surprise that one of the stocks he’s bought the most this year, western oilwas also one of the hottest – it’s up 140% while the S&P500 fell 13%.

But rather than trying to follow in Buffett’s footsteps, investors can look for similar stocks that fit his investment strategy and are not in Berkshire Hathawayportfolio of. By doing this and not following the crowd, you could set yourself up for better earnings down the road.

A few Buffett-like stocks to consider buying long-term right now are UnitedHealth Group (A H 0.12%) and Anheuser-Busch InBev (BUD 0.87%).

1. UnitedHealth Group

Buffett is a fan of insurance and in 1996 he bought GEICO, which is now a subsidiary of Berkshire Hathaway.

UnitedHealth is the largest health insurance company in the United States and could complement Berkshire’s portfolio. However, its business goes beyond just insurance, as its Optum business focuses on providing healthcare services, including OptumRx, which delivers medicines to patients’ homes.

UnitedHealth has also grown through acquisitions. Earlier this year it announced plans to acquire a home care company LHC Group for $5.4 billion. What might please Buffett about the company is that amid this growth and expansion, UnitedHealth has consistently turned a profit.

UNH Revenue Data (Quarterly) by YCharts

This kind of consistency makes it much easier to project where the business might be in the next 10 years. Stocks that lack consistency and predictability, such as those involved in technology, are often not bought by Buffett for this reason. UnitedHealth’s steady growth and reliable, predictable business is why it could easily be a stock in Berkshire’s portfolio.

While its valuation is a bit rich at nearly 30 times earnings (the average healthcare stock trades at 21 times earnings), with an aging US population and a continued need for health coverage, it’s a safe assumption that UnitedHealth’s earnings will continue to grow over the years, making its earnings multiple look smaller in the future.

For long-term investors, UnitedHealth is the type of stock you can just buy and forget.

2. Anheuser-Busch InBev

Another area that is a Buffett favorite is consumer goods. What if Buffett wasn’t busy consuming Coca Cola products, which he says make up a quarter of his daily calories, it’s possible that other beverage companies could find their way into Berkshire’s portfolio. But what’s clear is that Buffett appreciates big brands, and Anheuser-Busch InBev owns some popular ones, including Budweiser, Bud Light and Stella Artois.

The blow to Anheuser-Busch is that its business hasn’t always generated much growth. But the company is expanding into seltzers and canned cocktails as part of its products beyond beer, so as to diversify its business and stay on top of consumer trends. Consistent earnings from Anheuser-Busch can help fuel this long-term growth.

BUD Income Chart (Quarterly)

BUD Earnings Data (Quarterly) by YCharts

The stock trades at 28 times earnings, which isn’t cheap, but the company should perform better as the economy returns to normal. The pandemic had a negative impact on its earnings, especially in the early stages of lockdown and restrictions. Taking analysts’ projections into account, the stock is trading at a forward price/earnings multiple of 17, which is the S&P500 average of 18.

Anheuser-Busch’s finances look healthy, and with the stock down 15% this year, it could be an attractive buy on a downside.

David Jagielski has no position in any of the stocks mentioned. The Motley Fool holds positions and recommends Berkshire Hathaway (B shares) and LHC Group. The Motley Fool recommends Anheuser-Busch InBev NV and UnitedHealth Group and recommends the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), long January 2024 $47.50 calls on Coca-Cola, short January 2023 $200 puts on Berkshire Hathaway (B shares) and $265 short calls in January 2023 on Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy.

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