These stocks are positioned to deliver long-term growth in cash flow.
When it comes to investing, the track record of the Oracle of Omaha speaks for itself. While Warren Buffett’s investments may not always hit the mark, it’s wise for investors to pay attention to his rationale.
The following two stocks offer a compelling mix of growth, cash flow, sustainable competitive advantages, and reasonable valuation, making them worthy of consideration for any investor.
1. Visa
Warren Buffett favors companies that generate cash flow and have sustainable competitive advantages. Berkshire Hathaway’s significant investment in Visa reflects those qualities. Consumers may associate Visa with banks due to its presence on credit and debit cards, but it operates as a fintech business, providing payment processing services globally.
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With the largest market share in its industry, Visa’s financial performance is tied to competitive activities and overall economic conditions. While payment volumes fluctuate with the economic cycle, the processing sector is expected to see significant annual growth over the next decade. Despite disruptive forces in the financial sector, Visa has managed to maintain its market share, expand its operations, and improve its return on invested capital (ROIC) over the years.
Visa’s forward P/E ratio of 23.5 is appealing for investors considering a cash-flow powerhouse with strong revenue and earnings growth potential.
2. Amazon
Amazon may have lost some appeal to growth investors as it matures, but the company is establishing itself as a cash-flow generator, matching Warren Buffett’s investment criteria. Amazon’s recent achievements include 10% revenue growth and significant increases in operating profits and cash flow.
Despite the normalization of the e-commerce industry post-pandemic, Amazon continues to enhance its dominant market position. Its focus on logistics, technology, and Amazon Web Services (AWS) create a strong economic moat that is challenging for competitors to breach.
Additionally, Amazon’s presence in content streaming and its profitable core operations demonstrate its ability to adapt to changing market dynamics. The company’s competitive advantages position it well for future cash flow growth and investments in emerging technologies.
While Amazon’s forward P/E ratio exceeds 35, the valuation is reasonable for long-term investors seeking exposure to a high-quality company with long-term growth potential.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Ryan Downie has positions in Alphabet, Amazon, Microsoft, and Visa. The Motley Fool has positions in and recommends Alphabet, Amazon, Berkshire Hathaway, Microsoft, Visa, and Walmart. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
