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First Three Stocks With the Best Businesses We’ve Seen for ever

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It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price. Warren Buffett said.

Wher we are looking for great stocks to buy, it’s usually best to take Buffett’s advice and begin by finding great companies. Since we are always on the lookout for great stocks, we reached out to three of our contributors and asked them about some of their favorite companies — specifically, the ones they see as having the best businesses out there.

Our contributors think Berkshire Hathaway (NYSE:BRK-A)(NYSE:BRK-B), Walt Disney (NYSE:DIS), and Procter & Gamble (NYSE:PG) make the cut. Keep reading to learn more about what makes these more than just great stocks, but also great businesses.

When the best investor ever is also the best CEO ever Jason Hall (Berkshire Hathaway)

Warren Buffett is widely considered to be one of the best investors in history. But what often gets overlooked is how much of the value he has created for Berkshire Hathaway shareholders derived from his incredible skill as CEO.

This has become more and more apparent over the past couple of decades, as Berkshire’s collection of wholly owned subsidiaries has expanded, and grown the company’s cash-generating capabilities. As of this writing, Berkshire’s market capitalization is $433 billion, while the value of its stock portfolio was $148 billion at the start of the year. In other words, Berkshire’s non-stock holdings are worth nearly $347 billion.

Making magic Keith Speights (Disney):

If you’ve ever had kids, it’s a near certainty that you have experienced the magic that only comes from Disney. Even if you’re not a parent, you have still probably enjoyed something entertainment from Disney — perhaps its ABC television shows, its movies, or ESPN sporting events.

What’s especially fascinating about Disney’s business is how the company cross-markets across all of its operating units. The entertainment giant will create an enormously successful movie, then market it through its broadcast TV network and its cable networks, and then sell toys, video games, and other products based on it through its own stores and other channels.

To be everywhere you are Rich Duprey (Procter & Gamble):

It’s an idea for a business: Provide products that people not only need, but use regularly and throughout their day in all facets of their life so they have to go out and regularly buy them again and again. That’s what consumer products giant Procter & Gamble does.

P&G has been in business for 179 years, and for 126 of them it has paid a dividend — one that it has increased annually for the last 60 years. It sells some 65 products in 10 categories in over 180 countries, and typically holds the top or second-place spot in market share. In 2016, it generated $65.3 billion in sales, and though that was down 5% from the prior year, it’s because over the past few years it has shed around 100 products to focus on its core categories.

At 26 times earnings and 22 times this year’s estimates, Procter & Gamble’s stock isn’t cheap, though its valuation is not much different from those of Clorox, Colgate-Palmolive, or Unilever, similarly situated consumer products companies with broad portfolios of well-known brands.

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