The Coca-Cola Company (KO), Berkshire Hathaway Inc. (BRK.A), C.H. Robinson Worldwide, Inc. (CHRW): Where to Put Your Money in a Bull Market

Warren Buffett’s Berkshire Hathaway Inc. (NYSE:BRK.A) is another great business selling at a reasonable price. An investor could make Berkshire Hathaway Inc. (NYSE:BRK.A) a 100% position and still claim to be diversified; the company is a roll-up of some of America’s greatest companies, and it is quickly adding great businesses from other parts of the world as well. Buffett’s focus on buying businesses with staying power should enable the company to generate massive earnings for decades into the future.

Berkshire Hathaway Inc. (NYSE:BRK.A) has traditionally generated an 8% to 10% return on equity. It currently trades at 1.4 times book value, which is about 15 times normal earnings based on historical return on equity. However, the company has compounded book value at nearly 20% per year since Buffett took over as CEO, so investors who buy now will likely end up with a market-beating return.

Finally, third-party logistics provider C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW) is the last great business trading at a low price that we will highlight. Like The Coca-Cola Company (NYSE:KO)’s distribution network, C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW)’s enormous network of carriers and shippers is impossible to replicate. The company’s scale allows it to provide customers with the widest selection of routes and methods of transportation, while also giving it the ability to hire top talent in logistics consulting. As a result, the company’s value proposition is second-to-none in the industry.

As a result of its wide moat, C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW) earns relatively stable margins — though the industry is subject to some cyclicality. The stock trades at 16.6 times trailing earnings, so investors can expect a 5% to 6% annual return over a long holding period. Although this is not as great as the return one can get from Berkshire Hathaway Inc. (NYSE:BRK.A) or The Coca-Cola Company (NYSE:KO), it is a good return for a great business in an overheated market.

Bottom line

The current bull market will make you look smart regardless of what you buy, but the eventual correction will make geniuses out of investors who focus on buying great businesses at reasonable prices.

The article Where to Put Your Money in a Bull Market originally appeared on Fool.com.

Ted Cooper has no position in any stocks mentioned. The Motley Fool recommends Coca-Cola. Ted is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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