1 Warren Buffett Stock Crushing the Market This Year to Buy and Hold Forever

President Donald Trump's aggressive policies have led to a global trade war and significant economic uncertainty, and investors aren't taking it well. Many are withdrawing their money from equity markets, leading to a sell-off. The S&P 500 is down by 12% since January.

However, despite all these challenges, some companies are performing well. Coca-Cola (NYSE: KO) is one of them. It has been in the portfolio of Berkshire Hathaway -- the conglomerate led by Warren Buffett -- for more than 30 years. Investors should take a page from the Oracle of Omaha's playbook and buy and hold this stock for good.

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Why Coca-Cola is performing well

The recent market sell-off has not affected every industry equally. U.S.-based companies that rely heavily on manufacturing in other countries, particularly China, have generally been worse off for obvious reasons. President Trump has targeted China more than any other country with his tariff plans.

Once these tariffs take effect, it could lead to inflation and potentially a recession. Corporations could pass on the increase in manufacturing costs to customers, resulting in higher prices across the board and a slowdown in the economy. This is an environment in which Coca-Cola should perform much better than most.

First, consider that the company will be able to limit the impact of tariffs. As CEO James Quincey said during its latest earnings conference call:

The vast majority of everything that's consumed in the U.S. is made in the U.S. Similarly, we're in virtually every country around the world. And so while it's a global business, it's very local.

The company's substantial manufacturing footprint in most countries where it does business is a great way to avoid a significant impact from tariffs. That doesn't mean it will feel no effect from these policies. Bottlers in each country rely somewhat on materials from other countries. But it should perform relatively well despite this new regime.

And even in a recession, Coca-Cola should manage relatively well. The consumer staples sector is defensive. It tends to be more stable amid economic and market fluctuations. Consider the performance of the Vanguard S&P 500 Index Fund ETF and the Vanguard Consumer Staples Index Fund ETF year to date -- the latter has had the best showing by some margin.

VOO data by YCharts.

That tells us little about specific companies within the industry, but Coca-Cola is among the more prominent ones. People are accustomed to buying its beverages, so Coke benefits from an incredibly strong brand name, which allows it to pass on cost increases to customers without losing significant market share. All these factors explain its strong performance this year.

Looking beyond the short term

The company has been a winner this year, but we aren't out of the woods just yet. The uncertainty could continue and eventually take even consumer staples giants like Coca-Cola down a notch.

There could be other unforeseen headwinds for the company as well. So, investors shouldn't bank too much on Coca-Cola performing well in the next eight months -- that's not Warren Buffett's approach, either. Anything can happen in the short term, but investing in solid stocks and holding them is the way to earn superior returns.

We have already seen several reasons why Coca-Cola is worth owning. It is well equipped to handle economic fluctuations and has a strong moat thanks to its brand name. Here are two more reasons.

First, it has a vast and diversified portfolio of drinks, along with the financial flexibility to adapt to different markets and evolving demands. The company offers practically every drink there is: water, alcoholic beverages, coffee, tea, juice, sports drinks, and more. It has increasingly offered low-sugar versions of some of its best-known brands as health concerns have become key drivers behind purchases.

Second, Coca-Cola is a terrific dividend-paying stock. It has increased its payouts for 63 consecutive years, making it a Dividend King. The long streak of payout increases -- along with its competitive forward yield of 2.8% -- is yet another piece of evidence that points to the strength and durability of Coca-Cola's underlying operations.

So, even amid its strong run this year, Coca-Cola is a top stock to buy and hold for the long term.

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Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool has a disclosure policy.