3 ASX stocks that look like classic Warren Buffett investments

When sharemarkets look choppy, many investors turn to Oracle of Omaha Warren Buffett for investment advice.

After all, Warren Buffett spent more than 60 years navigating crashes, recessions, and market volatility to become one of the richest people in the world. 

His investing wisdom boils down a few key philosophies: rational decision-making, patience to hold stock long-term, and picking high-quality businesses.

With that in mind, there are three ASX stocks which I think look like they align with Warren Buffett’s investment strategy.

Transburban Group Ltd (ASX: TCL)

One of the key qualities that Warren Buffett looks for when making an investment is a competitive advantage that protects the company’s long-term market share and profitability.

A great example of this is global infrastructure business Transurban. The company builds and operates major urban toll road networks, tunnels, and bridges and operates 22 assets across Australia, the US, and Canada.

Transurban benefits from a defensive quality because its services are essential. Even in the event of a downturn, people still need to travel to work or transport goods and services. Transurban’s toll roads typically have stable traffic volumes year-round, which means the business enjoys resilient cash flow regardless of economic conditions. 

Another bonus is that most of its toll roads are on an annual contract. This means Transurban is able to increase its toll prices each year in line with rising inflation. 

Wesfarmers Ltd (ASX: WES)

Warren Buffett famously prefers businesses with a strong history, trusted management, reliable long-term profit growth. 

Wesfarmers embodies all three of these things. The company is well-established and financially sound with a history of reliable growth and stability. 

It also owns major brands across several different industries, including Kmart, Bunnings and Priceline and continually focuses on expanding its markets, product categories and digital capabilities to drive long-term growth. 

It’s this stability and consistent long-term net profit growth that make Wesfarmers stand out amongst other ASX blue-chip stocks.  

Xero Ltd (ASX: XRO)

Xero doesn’t offer the long-standing history or defensive nature of Wesfarmers or Transurban, but I think its sticky business model and recurring subscription revenue is something Warren Buffett would approve of.

The nature of the business means its customers are likely to keep paying for its services and products over a long time. And that translates to a reliable long-term revenue stream.

At the same time, the ASX tech stock still has a relatively small market position, suggesting there is potential to unlock significant growth. 

The company is actively expanding its product suites, such as payroll and workflow automation, and also its global presence in the UK and the US.

The post 3 ASX stocks that look like classic Warren Buffett investments appeared first on The Motley Fool Australia.

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Motley Fool contributor Samantha Menzies has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Transurban Group, Wesfarmers, and Xero. The Motley Fool Australia has positions in and has recommended Transurban Group and Xero. The Motley Fool Australia has recommended Wesfarmers. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.