In the world of investing, names like Warren Buffett need no introduction. The so-called Oracle of Omaha has amassed a fortune by investing in the stock market and he shows no signs of slowing down.
I’m imagining a scenario in which Buffett himself was considering investing in some British stocks, searching for those gems he could entrust his capital with for two decades or more.
With that in mind, I’m sharing the two FTSE 100 stocks that I think not only catch the eye of many prudent investors, but also align with the principles that have made Buffett the legendary investor he is today.
A global business with popular brands
Buffett famously said that if you aren’t willing to own a stock for 10 years, don’t even think about owning it for 10 minutes. In my view, part of this means searching for companies with well-established track records and enduring fundamentals.
Established over a century ago, Unilever (LSE:ULVR) is one of the world’s largest consumer goods companies. And in my opinion, it embodies the qualities of a company worthy of a decade-long commitment, if not way more.
The group’s success has been built on its well-known and trusted brands, of which it now has over 400. This level of brand power means that on the average day, 3.4bn people use a Unilever product.
However, protecting the quality of those brands comes at a significant cost. To illustrate, brand and marketing investment rose €0.4bn over the last half year and increased spending is expected to continue. Too much spending could impact short-term profitability, potentially leading to lower earnings.
Nonetheless, there are still opportunities for further growth over the long term. For instance, the company has committed to sharpening its focus and investment in key growth markets. And then to top it all off, the group’s valuation currently sits below the longer-term average.
A leading international bank with a competitive advantage
The concept of margin of safety is a term used Buffett employs to determine if he’s paying a good price. And he places a lot of emphasis on it. So much so that he once said the three most important words in investing are ‘margin of safety’.
In simple terms, it’s the difference between a stock’s intrinsic value and its current market price. This disciplined approach provides a cushion against unforeseen market challenges and maximises the potential for long-term gains.
One Footsie stock that I think is trading significantly below its intrinsic value is Standard Chartered. While there are concerns stemming from China’s commercial real estate sector woes, I’m a huge fan of the bank’s exposure to Asian markets.
After all, it gives the bank an opportunity to tap into the potential of emerging and high-growth markets, as well as more established economies.
With a presence in more than 50 countries around the world, Standard Chartered is a well-diversified beast with experience and capabilities that I think sets it apart from competitors.
Considering all of the above, I reckon Buffett would be eager to buy and hold for the long term given the current P/E ratio of 8.5.
The post The 2 FTSE 100 stocks I think Warren Buffett would buy and hold for 20 years appeared first on The Motley Fool UK.
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Matthew Dumigan has no position in any of the shares mentioned. The Motley Fool UK has recommended Standard Chartered Plc and Unilever Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
