Warren Buffett rarely gives advice on buying stocks. But in the year 2000 Berkshire Hathaway At the annual meeting, the former CEO shared one name that investors should consider as a standout.

According to Buffett, one business is so powerful that if someone could own just one share for the next 50 years, it would be complex to find a better candidate. Guess what it was.

Costco

His Costco (NASDAQ: COST). In Buffett’s words: “Costco is an absolutely fantastic organization… If you had to choose one company to own for the next 50 years, you’d be hard-pressed to find a better one than Costco.”

Quite fair. But the really captivating thing is not Which Buffett’s stocks identified, but Why chose it. This has to do with the company’s business model.

Like many companies, Costco uses economies of scale to generate a cost advantage. It then passes them on to consumers in the form of lower prices, creating powerful customer loyalty.

Keeping prices low also makes things very complex for competitors. Every time another retailer raises its prices, Costco looks more attractive by comparison.

The process is self-reinforcing. Customer acquisition helps boost a company’s scale, which increases its cost advantage, which allows it to further lower prices, attracting more customers.

These shares were once part of Berkshire’s portfolio, but the company sold its shares, which Buffett later described as a mistake. And at today’s prices, it looks steep to buy.

So the question for investors is where to find companies similar to Costco with shares trading at more attractive prices. And I think that might be a place worth looking for FTSE100.

Kompas Group

Kompas Group (LSE:CPG) is a contract catering company. It’s a different industry than grocery retail and can be more cyclical, as investors have noticed recently.

A recession may force companies to cut external spending, threatening demand. While it’s risky, there are striking similarities between the company’s business model and Costco’s.

Compass has a large-scale advantage, being the largest operator in its industry and similar in size to its next two competitors combined. And he uses it to buy ingredients in bulk.

This generates economies of scale, giving the company a cost advantage. This allows it to be competitive on contracts, but that’s not the only similarity to Costco.

One of the most attractive things about Costco is its membership structure. Customers pay a subscription just to shop in their stores – and Compass has something similar.

The company allows third parties to utilize its food shopping platform and benefit from the savings that come with it. However, it charges a fee for this, which increases its margins and profits.

Long-term investing

The first thing Warren Buffett cited in support of Costco was its business model, not its growth potential or profit margins. I think this is quite striking.

There are few companies that can do what Costco can, but Compass is probably one of the closest comparisons. I believe investors should consider purchasing with the intention of owning it for the next 50 years.