Billionaire investor Warren Buffett loves stocks with what he calls ‘economic moats.’ This is another term for a competitive advantage, and can include anything from lower costs to a strong brand or product patents.
Tritax Eurobox (LSE: EBOX) is a top UK share with a formidable economic moat of its own. This property stock owns and rents out dozens of warehouses and distribution assets on mainland Europe. It’s a sector that requires vast amounts of capital, thus reducing the threat from new competitors (Tritax’s own portfolio was valued at a whopping €1.7bn as of March).
7.1% dividend yield
So what makes the FTSE 250 firm such an attractive buy today? In a word, e-commerce. The growth of internet shopping is supercharging demand for storage and logistics assets like this. Yet supply is failing to keep up, meaning that rental income at Tritax Eurobox continues to grow strongly.
Deteriorating economic conditions could weigh on profits growth here in the near term. Just today, shipping giant Maersk advised that a looming global recession threatens to damage “global transportation and logistics demand”.
But I still believe Tritax Eurobox’s bright long-term outlook makes it a brilliant buy for investors. And its mighty 7.1% forward dividend yield provides a great bonus.
Another Buffett-like stock
Warren Buffett also believes oil stocks have huge investment potential right now. In fact, Chevron is Berkshire Hathaway’s fourth-largest holding as of today.
Oil prices have risen strongly in 2022. And they could remain elevated as supply worries persist, worsened by the war in Ukraine. Indeed, Brent crude prices rose again in October as OPEC+ countries agreed to slash production.
This provides an obvious boost to fossil fuel producers like Shell (LSE: SHEL). But this doesn’t mean I’ll be buying this particular FTSE 100 business today.
I’m not just worried about the oil demand outlook as the global economy tilts towards recession. UK-based oil producers like this also face the threat of a hefty windfall tax being slapped on their profits.
On Tuesday, BP recorded underlying replacement cost profit of $8.2bn for the third quarter. This dwarfed the $3.3bn it reported in the same 2021 period. And it followed Shell’s own forecast-beating results last week.
Consequently, calls from politicians of all parties are growing. It’s possible that a windfall tax could be included when the autumn budget is announced on 17 November.
As an investor I also fear for Shell’s long-term profits as oil and gas is replaced with cleaner energy sources. Steps to address the climate crisis, allied with the West’s drive to buy less Russian oil, is speeding up the adoption of renewable energy and alternative fuels.
Warren Buffett also loves a good value stock, and on paper Shell looks like it offers good value for money. Today it trades on a forward price-to-earnings (P/E) ratio of 5.2 times.
However, I believe that Shell’s cheap share price reflects its high risk profile. So I’d much rather buy other UK shares this November.