3 high-quality ASX 200 shares I think Warren Buffett would probably love

Warren Buffett has built one of the greatest investing track records in history by focusing on a relatively simple idea. 

That is buying high-quality businesses with lasting competitive advantages and holding them for the long term.

Of course, we can’t know exactly which ASX shares Buffett would buy if he were investing in Australia. 

But we can look at the characteristics he tends to favour. Strong brands, dominant market positions, reliable earnings, and businesses that are easy to understand often feature heavily in Berkshire Hathaway’s (NYSE: BRK.A) portfolio.

With that in mind, here are three ASX 200 shares that I think could fit comfortably within a Buffett-style investment approach.

Cochlear Ltd (ASX: COH)

Cochlear is the kind of business that ticks many of the boxes Buffett often looks for.

The company is a global leader in implantable hearing solutions, with a dominant position in a specialised medical technology market. Its products help restore hearing for people around the world, which gives the business both strong demand and a meaningful purpose.

One of Cochlear’s biggest strengths is the ecosystem it has built around its technology. Once a patient receives a Cochlear implant, they typically remain connected to the company’s processors, upgrades, and services for many years. That creates recurring revenue opportunities and a very loyal customer base.

Buffett has often said he likes companies with strong competitive advantages that are difficult for rivals to replicate. Cochlear’s decades of research, intellectual property, and global reputation make it difficult for rivals to challenge.

REA Group Ltd (ASX: REA)

REA Group also feels like a business that could appeal to Warren Buffett’s investing style.

The ASX 200 share operates Australia’s leading online property listings platform through realestate.com.au. Its position in the market gives it a powerful network effect. Sellers and agents want to list properties where the most buyers are looking, and buyers naturally gravitate to the platform with the most listings.

That self-reinforcing advantage has allowed REA to build a dominant position in online property advertising.

Buffett often talks about businesses that effectively become the default choice in their industry. In Australia’s property market, REA’s platform has that kind of status.

As long as Australians continue buying and selling property, REA should remain an important gateway for that activity.

Wesfarmers Ltd (ASX: WES)

Wesfarmers is another ASX 200 share with several characteristics commonly found in Warren Buffett investments.

The conglomerate owns a portfolio of businesses across retail, chemicals, and industrial operations, but its most valuable asset is Bunnings.

Bunnings has become the dominant home improvement retailer in Australia and New Zealand, with strong brand recognition and a reputation for competitive pricing. That leadership position has helped the business deliver consistent earnings and strong returns on capital over many years.

Buffett has often spoken about the value of companies that combine strong brands with disciplined management teams. I think Wesfarmers’ long history of careful capital allocation and steady business expansion fits that description well.

Foolish takeaway

It’s impossible to know exactly which Australian shares Warren Buffett would buy if he were investing on the ASX.

But by looking at the types of businesses he typically favours, it’s possible to identify companies that share similar qualities. Cochlear, REA Group, and Wesfarmers all have strong market positions, lasting competitive advantages, and business models that have proven themselves over many years.

Those are exactly the kinds of traits Buffett has long looked for when building a portfolio designed to compound wealth over time.

The post 3 high-quality ASX 200 shares I think Warren Buffett would probably love appeared first on The Motley Fool Australia.

More reading

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• What I’d buy if the ASX share market crashes
• Here’s the dividend forecast out to 2030 for Wesfarmers shares
• How I’d invest $20,000 in the ASX share market right now

Motley Fool contributor Grace Alvino has positions in Wesfarmers. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Berkshire Hathaway, Cochlear, and Wesfarmers. The Motley Fool Australia has recommended Berkshire Hathaway, Cochlear, and Wesfarmers. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.