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7 Stocks to Own in a Volatile Market

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Investing for more than 50 years, Warren Buffett has made a fortune on everything from bank stocks to shares of a Chinese battery maker. But if there’s one thing he always looks for, it’s businesses with a so-called wide economic moat.

Whatever the industry, companies that prosper over the long term tend to have defenses around their business that protect their profits and shield them from competitors. These barricades could be the advantage of low costs, a dominant brand or service, or steep barriers to entering a business—anything that helps a company maintain its financial edge and keep profits afloat.

Of course, few moats are permanently impregnable, making it critical to find companies with sustainable, long-term advantages. If a business constantly needs to reinvent itself to survive, or if it operates in an industry that’s deteriorating (think coal and some other commodities), a moat may offer scant protection. As Buffett puts it, “A moat that must be continually rebuilt will eventually be no moat at all.”

Today, investing in fortress-like companies seems prudent. While these defenses can't protect them from all economic downdrafts or a broad stock-market decline, wide-moat companies, including our seven picks, should be more stable and suffer less collateral damage than weaker rivals.

All returns, share prices and related data are as of January 22; price-earnings ratios are based on estimated earnings for the next four quarters.

7 Stocks to Own in a Volatile Market

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