3 No-Brainer Warren Buffett Stocks to Buy Right Now

Key Points

• Moody’s treasure trove of financial data makes it an evergreen investment.

• American Express’ diversification insulates it from interest rate swings.

• Chubb’s scale makes it one of the safest insurance companies to invest in.

• 10 stocks we like better than Berkshire Hathaway ›

Warren Buffett, the chairman and CEO of Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B), is one of the most closely followed investors in the world. So when he pruned Berkshire's stakes in some of its top stocks, hoarded cash and U.S. Treasuries, and halted the conglomerate's buybacks of its own stock over the past two years, many investors grew worried the market was peaking.

But amid his big strategic shift, Buffett didn't touch some of Berkshire's biggest financial sector holdings. Let's take a look at three of those resilient, evergreen stocks -- Moody's (NYSE: MCO), American Express (NYSE: AXP), and Chubb Limited (NYSE: CB) -- and see why they're still no-brainer buys, even in this frothy market.

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Moody's

Moody's is one of the biggest providers of financial data, credit rating, and analytics services in America. It provides those services to a wide range of companies, financial institutions, and investors, and it shares a near-duopoly in this market with S&P Global.

Moody's business is evergreen because its customers rely on its financial data amid bear and bull markets alike. Recessions, wars, and other economic crises can also drive those customers to ramp up their spending on such data with the goal of being able to make smarter financial decisions during uncertain times.

From 2024 to 2027, analysts expect Moody's revenue and earnings per share (EPS) to grow at compound annual rates of 7% and 13%, respectively. Its stock isn't cheap at 36 times next year's expected earnings, but its steady growth and wide moat justify that high valuation. Its near-term growth should be driven by lower interest rates -- which should spark a boom in fresh financing -- and new AI partnerships. That's probably why Buffett still holds a $12.6 billion stake in Moody's -- that's 4.3% of Berkshire's equity portfolio. Berkshire initiated that position in 2000, and it hasn't sold a single share of Moody's since 2013.

American Express

Another one of Buffett's evergreen financial plays is American Express. Buffett started to accumulate shares of the financial services firm in 1964 -- a year before he acquired Berkshire Hathaway -- and he boosted Berkshire's stake in the company in 1991.

Berkshire hasn't sold any shares of American Express since 2012, and that $46.4 billion stake now accounts for 15.7% of its portfolio. It's the conglomerate's second-largest stock holding after Apple. Buffett is so bullish on American Express in part because it's built to withstand credit crunches, wild interest rate swings, and other unpredictable macroeconomic headwinds.

American Express is often compared to Visa and Mastercard, but it operates using a different business model. While Visa and Mastercard don't issue their own cards or lend money to consumers, American Express issues its own cards backed by its own bank. Its card-issuing business grows faster when lower interest rates spur consumer spending, while its banking business generates higher profits when interest rates rise. Since it needs to back its cards with its own balance sheet, it only approves higher-income, lower-risk consumers for its cards.

From 2024 to 2027, analysts expect that balanced business to grow its revenue and EPS at compound annual rates of 8% and 12%, respectively. It still looks like a bargain at 18 times next year's expected earnings, and it should easily weather the near-term macro headwinds and keep growing over the long term.

Chubb Limited

Buffett pruned a lot of Berkshire's top holdings over the past two years, but one stock that he aggressively accumulated during that period was the American-Swiss insurance giant Chubb. Berkshire initiated its position in Chubb in 2023, and it continued to buy shares in 2024. Its position is now worth $7.4 billion and accounts for 2.5% of the conglomerate's portfolio.

Chubb is an evergreen play because even during economic downturns when they are tightening their belts, individuals and businesses generally don't cancel their insurance policies. It's the world's largest publicly traded provider of property and casualty (P&C) insurance policies, and it ended 2024 with a P&C combined ratio of 86.6%. An insurer's combined ratio is calculated by adding its total claims (losses) to its expenses, dividing that by its premiums collected, and multiplying that figure by 100. That figure must remain below 100% for its business to be sustainable (since its claims can't exceed its premiums earned). Chubb's is well below the average of 96.6% in the U.S. for P&C insurers. That low ratio indicates that it's taking a prudent approach toward its business.

From 2024 to 2027, analysts expect Chubb's revenue and EPS to grow at compound annual rates of 5% and 8%, respectively. That stable growth should be driven by its overseas expansion and the rollout of more AI tools for streamlining and automating its claim approvals. Its stock still looks like a bargain at 11 times next year's expected earnings, and it should remain a reliable investment in this frothy and volatile market.

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American Express is an advertising partner of Motley Fool Money. Leo Sun has positions in Apple and Berkshire Hathaway. The Motley Fool has positions in and recommends Apple, Berkshire Hathaway, Mastercard, Moody's, S&P Global, and Visa. The Motley Fool has a disclosure policy.