3 FTSE 100 shares I’d buy to invest like Warren Buffett

When I look for a stock to buy, one of the first things I consider is whether the company has an economic moat – something that protects it from competition. And I think there are some FTSE 100 stocks that fit the bill.

This is something that Warren Buffett talks about. As Buffett put it:

A really good business needs to have a ‘moat’ that can maintain an excellent return on capital. The dynamics of capitalism ensure that competitors will repeatedly attack the ‘fortress’ of businesses that achieve high returns. Therefore a strong barrier such as the company to be a low-cost producer […] or have a strong brand worldwide […] essential to continued success.

Finding a business with a good moat is the key to long-term investment success. With that in mind, here are three UK stocks that I think have a durable economic moat.

Diageo

Diageo is one of the leading manufacturers of spirits. A bit like that Coca Cola (one of Buffett’s most famous investments), the company’s economic moat comes from its impressive portfolio of brands.

The company owns the best-selling gin brand (Gordon’s), the best-selling vodka (Smirnoff), and the best-selling scotch (Johnny Walker). It offers something that no other company has.

Strong brands allow companies to charge premium prices for their products, increasing their margins. It can then use the excess cash to reinvest into brand marketing, providing a lasting benefit to customers.

Move right

Another stock that I have a good economic moat is Move right. The company has the largest online property platform in the UK and its size gives it an advantage over its competitors.

Rightmove businesses are protected by network effects. Estate agents advertise on these platforms because that’s where buyers search for properties, and buyers search there because that’s where estate agents advertise.

With more than 80m visits per month than its nearest competitor, Rightmove has an attractive proposition for agents. Competitors will find it difficult to attract agents with fewer visits, making it harder to attract buyers.

Halma

The last one on my list is Halma. The company is actually a collection of small businesses and its economic moat comes from the characteristics of its subsidiaries.

Halma focuses on acquiring businesses that have a dominant position in a specific market. It provides protection from larger and smaller competitors.

For larger competitors, the size of the market is not large enough to justify the investment required to compete. For smaller disturbances, the dominant position that businesses occupy makes them difficult to dislodge.

UK stocks

One of the hallmarks of Warren Buffett’s investing is his focus on US equities. This is partly because Buffett knows his home market better than anywhere else.

I think there are some great businesses in the UK, though. Diageo, Rightmove, and Halma are FTSE 100 stocks with good economic moats, making them attractive stocks to consider buying for investors like Warren Buffett.