3 No-Brainer Warren Buffett Stocks to Buy Right Now

Warren Buffett is a famous billionaire investor, and his trillion-dollar conglomerate, Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B), owns nearly 50 stocks in its portfolio. Several of these stocks are in the financial and energy sectors. Moreover, Buffett's Berkshire has some Japanese stocks. All these things are outside of my area of expertise. Therefore, it's important to state upfront that I mostly look past these holdings when looking for no-brainer buys.

Another caveat to this discussion is that the term "no-brainer" is a touch of hyperbole -- investing requires thinking. Something is rarely such an extraordinarily good opportunity that there's no real downside possibility.

Caveats aside, Berkshire Hathaway holds a variety of high-quality businesses, and several are good buys right now. Among these are Amazon (NASDAQ: AMZN), Pool Corp (NASDAQ: POOL), and Ulta Beauty (NASDAQ: ULTA). Here's why.

1. Amazon

Amazon is one of the largest companies in the world, so some people are surprised when more upside is suggested. But I believe it indeed has more upside. For starters, the core e-commerce business is rock solid. And the company's advertising services and Amazon Web Services (AWS) cloud computing platform are both still growing at an impressive rate.

Advertising was one of the most no-brainer moves Amazon ever made. Having the world's largest e-commerce platform gives it incredible insight into consumer behavior. It's how it's quickly grown advertising into a greater than $50 billion annual revenue business. And this business is still scaling quickly, with 19% year-over-year growth in the most recent quarter.

Of course, no discussion of Amazon is complete without mentioning AWS. Growth had slowed for the platform in recent years. But given its financial results for the third quarter of 2024, AWS's growth has officially accelerated across four straight quarters, most recently showcasing 19% growth.

Amazon's management believes artificial intelligence (AI) will continue to drive demand for its AWS platform, and that's good news for shareholders. AWS is far and away the most profitable part of the business, accounting for 60% of its Q3 operating income. As AWS grows profitably, shareholders should be rewarded with a higher stock price.

2. Pool

Whereas Amazon is full of futuristic technology, Pool is much more down to earth with its swimming pool supply business. It's one of the newest stocks in Berkshire's stock portfolio. And while the position is small, it's easy to see what Buffett and company like about this company.

Pool installs new swimming pools, fixes old ones, and provides swimming pool equipment, accessories, and maintenance products. The company's growth slows when discretionary income is tight and people, consequently, aren't putting in pools or fixing up old ones -- that's what's going on right now. But the regular upkeep of pools provides it with a steady source of revenue and profits.

Warren Buffett often talks about the importance of a high return on investing capital (ROIC), a metric that compares profits with its assets. Right now, Pool's ROIC is lower than it's been in the past. But at almost 19%, it's still high enough to draw attention.

POOL Return on Invested Capital data by YCharts.

In short, Pool is a long-term profitable growth machine. Ongoing profits and a high ROIC suggest that the company is in a position of competitive strength in its space, even during this industry slowdown. That would further suggest that it's in a great position for surging profits whenever swimming pool installations pick back up.

3. Ulta Beauty

Ulta Beauty stock is in Berkshire's portfolio for now, but it might not be for much longer. Last quarter, the company bought a roughly $250 million position in the cosmetics retailer. But with the latest update to its holdings, it was revealed that Berkshire sold 95% of its Ulta Beauty stock. In short, it looks like Berkshire plans to sell out soon.

I humbly disagree with Berkshire's decision to sell Ulta Beauty. Most of the company's sales come from its 44 million loyal rewards program members, giving sales a degree of dependability. Its operating margin remains strong at about 13% -- at about the level management believes it can sustain long term. And with profits, management routinely lowers the outstanding share count with buybacks.

The kicker for me today with Ulta Beauty stock is its inexpensive valuation. A cheap valuation allows management to reduce its share count faster with its buyback program, boosting shareholder value more quickly. As the chart below shows, the stock's valuation has rarely been cheaper from a price-to-earnings (P/E) perspective.

ULTA PE Ratio data by YCharts. PE Ratio = price-to-earnings ratio.

In my view, this cheap valuation is what pushes Ulta Beauty stock toward no-brainer-buy status. In short, the company doesn't need to do anything extraordinary to be a good investment. Hanging on to its existing customer base and keeping operating expenses in check should unlock enough profits to provide upside for shareholders.

Moreover, I believe the valuations are reasonable for Amazon stock and Pool stock as well, making any of these three stocks good buys for investors today.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Jon Quast has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Berkshire Hathaway, and Ulta Beauty. The Motley Fool has a disclosure policy.