12 Best Long-Term Stocks to Buy According To Warren Buffett

6. Moody’s Corporation (NYSE:MCO)

Warren Buffett’s First Major Purchase: 2010

Berkshire Hathaway’s Latest Investment Stake: $10.38 Billion

Number of Hedge Funds Holding Stakes as of Q2: 59

Moody’s Corporation (NYSE:MCO) is an integrated risk assessment company that develops products and services to support risk management activities. It also offers credit research, credit models and analytics, economics data, and models.

Moody’s Corporation (NYSE:MCO) is one of the oldest and longest holdings in Buffett’s portfolio due to its near-monopoly position in the credit ratings business. Its competitive edge stems from a resilient business structure that sustains any business environment. This is because individual loans and corporate bond assignments tend to increase during a low-interest rate environment. The company gets more corporate risk management work when interest rates are high.

Moody’s Corporation (NYSE:MCO) has also established partnerships with MSCI, Zillow, and Google with the goal of broadening its market reach and improving its product range. Even though there are expected difficulties in banking and asset management, Moody’s remains hopeful about its Software-as-a-Service (SaaS) divisions and growth objectives over the next few years.

The credit rating firm has established a solid standing on employing sophisticated financial frameworks that are hard to replicate. Beyond these elements, its brand image, technological advancements in Software as a Service (SaaS), and ability to set high prices all play a role in its broad economic barrier. In 2021, it boldly raised the fees for its credit rating services, therefore strengthening its revenue base. The surge in borrowing during the pandemic led to robust demand, prompting businesses to pay the higher fees for the credit ratings.

Consequently, the company recorded a 7% revenue increase in the second quarter due to solid demand for Moody’s Corporation (NYSE:MCO) proprietary data and unique analytical insights. A significant increase in revenue of 18.56% in the past year shows the firm’s ability to boost its income effectively. The remarkable gross profit margin of 73.01% during this time underscores Moody’s effective management and dominance in the market. While the stock trades at a premium with a price-to-earnings multiple of 37, it is expected to go by robust growth while rewarding investors with a 0.71% yield.

For their Q2 2024 shareholdings, 59 out of the 912 hedge funds tracked by Insider Monkey had bought the firm’s shares. Moody’s Corporation (NYSE:MCO)’s largest hedge fund investor is Warren Buffett’s Berkshire Hathaway, owning $10.38 billion worth of shares.