If you’re a more risk averse investor, identifying recession-proof Warren Buffett stocks can be a great way to build and preserve your wealth. When economic activity slows down and uncertainty clouds the stock market, Wall Street tends to run to safety.
Safety can be characterized in a variety of different ways. This can be stocks operating in specific sectors like consumer staples or companies with strong cash flows and liquidity. Additional considerations can include the company’s moat, performance during past recessions and its ability to manage capital efficiently.
Warren Buffett’s deep rooted value investing philosophy has been proven effective while adapting to the modern investing era. By taking a more structured approach focused on growth and stability, investors can prepare themselves to weather any future economic storms ahead.
Now, let’s discover the top three recession-proof Warren Buffett stocks set to thrive during the next recession!
Berkshire Hathaway (BRK-A, BRK-B)
Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B), Warren Buffett’s own conglomerate holding company is a beacon of stability during tough economic times. With strong cash reserves and a diversified portfolio spanning various industries, Berkshire provides a nice cushion against headwinds in the broader economy.
Berkshire Hathaway is a great place to start for investors seeking recession-proof companies in the stock market. It is a top 10 S&P 500 holding, with a 10-year total return that has beaten the index. The company is known for its large stake in the insurance industry with its ownership of Geico and reinsurance firm, Gen Re. Additionally, it also has ownership in other industries including railroads, retail, home furnishing, jewelry and natural gas. This diversification provides more certainty to the business when certain sectors face inevitable bumps in the road. However, what makes the company recession-proof is its robust cash reserves, up 13% from the Q4 FY23. With its cash pile hitting a record $188.99 billion in the first quarter, Berkshire can withstand any economic shock that comes its way.
Chubb (CB)
Chubb (NYSE:CB), a global insurance company, is another great pick among the top recession-proof Warren Buffett stocks to buy in 2024. The insurance industry’s non-cyclical nature will position the company to continue thriving during the next recession.
Chubb is a remarkable business that is up Warren Buffett’s alley. The company operates in more than 54 countries and territories, making it well diversified across the globe. In addition, it offers a wide range of insurance products including property and casualty, accident and health, reinsurance and life insurance. The company’s diverse product offerings and prudent underwriting discipline has contributed immensely to its revenue and earnings growth in the last year. This is especially evident in the last 6 months, in which operating income hit a six-month record. In Q2 FY24, revenue increased 15% year-over-year (YOY) to $13.83 billion. Operating income swelled 7.5% YOY to $2.20 billion, or $5.38 per share. Chubb’s diversification and continued strong financial results make it well positioned to navigate risks as they emerge across the globe.
Aon (AON)
Aon (NYSE:AON) is a management consulting firm that provides a broad range of risk management solutions for its clients. With products and services addressing industry specific challenges, Aon is an invaluable partner to businesses looking to safeguard their assets.
Aon is a quintessential company that will thrive during recessionary periods. When businesses become concerned of recession risks in the economy, demand for risk management consulting services tends to rise. Ultimately, this could bolster the company’s revenue and earnings during times of economic uncertainty. Its diverse client base can also add an extra layer of protection during this period. The company provides services for every industry imaginable from finance to retail and information technology. It can provide tailored risk assessment insights and advice that meet the needs of the business and its customers. In the 2023 fiscal year, revenue increased 7% YOY to $13.4 billion. Earnings per share rose 3% to $12.51 per share, with free cash flow up 5% to $3.183 billion. Aon’s strong margin profile and robust dividend growth is also a great sign for the business moving forward.
On the date of publication, Terel Miles did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.