2 Warren Buffett-style FTSE 100 stocks to consider for an ISA

A focus on quality and value has made the Omaha native the most successful investor in history. Here are two FTSE 100 shares I think he’d adore.

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Warren Buffett at a Berkshire Hathaway AGM

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Warren Buffett is (in this Fool’s opinion) the gold standard when it comes to investing idols. His money-making strategies have been a big influence on my own stocks portfolio that’s dominated by FTSE 100 and FTSE 250 shares.

Since he bought his first share in 1941, the ‘Sage of Omaha’ has amassed a fortune north of $135bn. This makes him the sixth richest man on the planet, and clearly someone worth listening to when it comes to investing strategy.

Buffett’s Berkshire Hathaway firm may focus on US stocks. But there are plenty on the FTSE that I think he’d love. Here are two I think he’d buy if he was building his own Stocks and Shares ISA.

SSE

Warren Buffett loves stocks with so-called economic moats. These are competitive advantages that help companies defend their profits from external threats, and assist them in maintaining (or growing) their market share.

Energy supplier SSE (LSE:SSE) is one such Footsie share. The business of energy generation, transmission and distribution requires significant capital investment that makes it tough for new entrants to compete. SSE expects to spend a whopping £20.5bn over the five years to 2026/27 alone.

In addition, the company operates in a very regulated environment. So even if another company comes along with significant financial resources, rigorous levels of compliance may not make it a profitable endeavour for them.

I think SSE’s focus on green energy gives it the potential to deliver brilliant earnings growth over the long term. Wind farm operators like this will play a critical role in helping Britain keep the lights on as the country transitions from fossil fuels.

The business is rapidly growing its green energy network to exploit this opportunity too. Dogger Bank — the world’s biggest offshore wind farm — delivered its first power in October. SSE plans to add 5GW of new capacity in the five years to 2026/27.

Earnings may suffer some turbulence during calm periods when power generation drops. But over the long term I think it can prove a lucrative investment.

Diageo

I’m fairly certain that Diageo (LSE:DGE) would feature greatly in any ISA Buffett invested in. His Berkshire Hathaway company already owns shares in the drinks giant!

There are two reasons I consider this to be an ‘ultimate’ Buffett-style stock. The billionaire investor loves to buy quality stocks when they’re on sale. And this FTSE 100 business has lost almost 20% of its value over the past year.

It’s also because Diageo has formidable economic moats. Products like Captain Morgan rum, Guinness stout and Smirnoff vodka have terrific brand power that competitors simply can’t compete with.

This is thanks in large part to the company’s eye-popping marketing budgets that keep its labels fashionable. Diageo spent a stunning $2bn on marketing in the six months to December alone.

Sales may struggle a little longer if consumer spending remains under the cosh. Troubles in its Latin America and Caribbean territory have weighed heavily more recently. But the Footsie firm has recovered from such turbulence before and delivered brilliant returns to its investors.

Trading on a price-to-earnings (P/E) ratio of 18.9 times, I think Diageo shares look pretty cheap right now.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Royston Wild has positions in Diageo Plc. The Motley Fool UK has recommended Diageo Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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