Investors seeking better-than-average returns typically have to take on greater-than-average risk. A company that can outpace the S 500 with less downside in the case of a market downturn is a rare find.

In his 2023 letter to Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) shareholders, Warren Buffett identified one company that has better prospects than the average American corporation. He also said it operates with less risk of losing capital, which should provide significant downside protection.

Buffett's track record of outperforming the S 500 since founding his first investment partnership in 1956 is quite astounding. The average compound annual return of Berkshire Hathaway stock since Buffett took control of the business in 1965 are nearly double the index. So, when Buffett says he believes a stock can do better than average, investors listen.

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Source Fool.com