According to the advice of Warren Buffett, what stocks to buy in the context of high inflation.
In a 1981 letter, the "Oracle of Omaha" highlighted two characteristics that help businesses thrive amid widespread price increases.
The rapid increase in inflation, which in the United States reached 7% year-on-year, the highest rate since June 1982, and affecting consumers, can be a problem for savers who have cash assets.
For this reason, the advice that the investment genius Warren Buffett gave to shareholders in 1981 could be helpful.
In a letter, the chairman of Berkshire Hathaway highlighted two characteristics that help companies thrive amid high inflation: the ability to raise prices quickly and the ability to take on more business without spending too much.
Based on this advice, the economic site Yahoo Finance found three companies that fit the description of the "Oracle of Omaha," as Buffet is nicknamed.
1) American Express
According to Yahoo Finance, American Express demonstrated its ability to raise prices with ease after increasing the annual fee on its Platinum Card from $550 to $695.
The company also benefits directly in the context of inflation because as the price of goods and services increases, it takes a larger share of the fees it charges with each Amex card transaction.
The company's revenue increased 25% year over year to $10.9 billion in the third quarter.
The company is trading at more than $ 170 per share, and they currently offer a 1% dividend yield.
Berkshire Hathaway owns 151.6 million shares of AXP, worth more than $24 billion. Its stake in the company is second only to Apple and Bank of America.
Coca-Cola also has some pricing power thanks to its long-established market position.
Also, according to Yahoo Finance, Coca-Cola can always rely on a trick it used in the past: keep its prices the same but subtly reduce the size of its bottle.
Another great strength is its portfolio of iconic brands, and its products are sold in more than 200 countries and territories.
Buffett has included Coca-Cola, a publicly-traded company for more than 100 years, in his portfolio since the late 1980s. Today, Berkshire owns 400 million shares of the company, worth approximately 23.1 billion. Of dollars.
The shares can secure a dividend yield of 2.8% at current prices.
While competitors offer cheaper devices, many consumers don't want to live outside the Apple ecosystem. That means that as inflation rises, Apple can pass higher costs on to its global consumer base without worrying as much about a drop in sales volume.
Earlier this year, the company said it had sold more than 1.65 billion devices, including more than 1 billion iPhones, its flagship product.
Today, Apple is Buffet's most significant stake, accounting for more than 40% of Berkshire's portfolio by market value.
One of the reasons is the massive rise in the tech giant's stock price. Apple shares have risen more than 500% in the past five years.
Apple currently offers a dividend yield of 1.7%.