Warren Buffett says these are the best stocks to own when inflation spikes — with consumer prices now at a white-hot 8.5%, it’s time to follow his lead

Warren Buffett says these are the best stocks to own when inflation spikes — with consumer prices now at a white-hot 8.5%, it’s time to follow his lead

Price levels are on the rise. In July, U.S. consumer prices surged 8.5% from a year ago — down from 9.1% in June but still near a multi-decade high.

Spiking inflation has severe consequences for your cash savings.

Fortunately, investing legend Warren Buffett has plenty of advice on what to own when consumer prices spike.

In a 1981 letter to shareholders, Buffett highlighted two business traits that investors should look for when trying to fight inflation: 1) the power to increase prices easily, and 2) the ability to take on more business without having to spend excessively.

Here are four Berkshire holdings that largely boast those characteristics.

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American Express (AXP)

Last year, American Express demonstrated its pricing power as it raised the annual fee on its Platinum Card from $550 to $695.

The company also stands to directly benefit in an inflationary environment.

American Express makes most of its money through discount fees — merchants are charged a percentage of every Amex card transaction. As the price of goods and services increases, the company gets to take a cut of larger bills.

Business is booming. In Q2, the company’s revenue jumped 31% year over year to $13.4 billion.

American Express is the fifth-largest holding at Berkshire Hathaway. Owning 151.6 million shares of AXP, Berkshire’s stake is worth nearly $25 billion.

Berkshire also owns shares of American Express competitors Visa and Mastercard, although the positions are much smaller.

American Express shares currently offer a dividend yield of 1.3%.

Coca-Cola (KO)

Coca-Cola is a classic example of a recession-resistant business. Whether the economy is booming or struggling, a can of Coke is affordable to most people.

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The company’s entrenched market position, massive scale, and portfolio of iconic brands — including names like Sprite, Fresca, Dasani and Smartwater — give it plenty of pricing power.

Add solid geographic…

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