Berkshire Hathaway (NYSE:BRK.A) (NYSE:BRK.B) CEO Warren Buffett is known as one of the founding fathers of value investing, but that doesn't mean the Oracle of Omaha eschews the growth aspects of a business. After all, as far back as his 1989 letter to shareholders, Buffett wrote, "It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price." 

Many value investors have been burned by bargain-hunting over the past decade, as growth stocks have absolutely trounced value stocks since the Great Recession. This could be due to a number of factors, but most notably, technological disruption is wreaking havoc on many legacy businesses in just about every industry. That's why companies riding today's tech tailwinds are making new highs, while those being disrupted have seen their shares stagnate (or worse) despite seemingly "cheap" valuations.

Therefore, instead of looking at the cheapest stocks in Buffett's portfolio for inspiration, investors may want to look at the most expensive stocks Berkshire owns. Likely, these are the most competitively advantaged businesses with the most superior growth prospects.

Based on price-to-earnings ratio -- one of the most common and useful valuation metrics -- the three most expensive stocks in the  Berkshire Hathaway portfolio are Charter Communications (NASDAQ:CHTR), Amazon.com (NASDAQ:AMZN), and StoneCo (NASDAQ:STNE). Here's why each is still a solid buy today.

A picture of Warren Buffett surrounded by people.

Image source: The Motley Fool.

Charter Communications

P/E ratio: 93.2

Forward P/E ratio: 38.8

Charter Communications is the second-largest cable operator in the U.S., behind only Comcast. Though it's on this list, its high P/E ratio is a tad deceptive, as the company's use of massive amounts of high-interest debt in its capital structure makes its earnings appear low. Its free-cash-flow profile is robust and accelerating, which explains why the stock has been on an absolute tear over the past year, up roughly 75%.

How has Charter done so well, even with such a high P/E ratio and heavy debt load? A few reasons. The company took on that massive debt burden in 2016 to finance two huge acquisitions: Time Warner Cable and Bright House Networks. Once those deals were completed, Charter then had to spend heavily on "insourcing" its customer service operations, transitioning dozens of siloed back-office operations onto one platform, and investing in DOCSIS 3.1 digital upgrades across its entire footprint -- technology that has given the cable industry a distinct advantage over satellite competitors. In addition, Charter teamed up with Comcast to offer mobile phone plans. That looks like a successful innovation for the company, but it's one that required a fair amount of start-up capital.

All of this heavy spending took place during a period in which investors grew more nervous about the cord-cutting trend, and the combination of factors drove a big sell-off in Charter's stock back in early 2018.

However, in 2019, a number of positives occurred. Charter reached the end of its spending cycle, and was able to cut its capital expenditures to roughly $7 billion from over $9 billion in the previous year. Meanwhile, the company continued to add broadband customers at a rapid clip, and its video customer losses have been relatively modest compared to those suffered by satellite TV operators. Broadband is also the much, much more profitable product, and as Charter added more broadband subscribers over its fixed network, profit margins and free cash flow surged.

While the stock is far more expensive than it was just a short time ago, there are still lots of reasons to like Charter. It has a large economic moat in that it has only one competitor in most of its geographic markets, and cable's digital technology appears to have an edge over satellite for modern communications. In addition, the company's mobile business has the potential to grow a lot in the coming years. Finally, Charter is recession-resistant, which should appeal to investors fearful that the U.S. economy's 11-year expansion is due to end.

AMZN PE Ratio Chart

AMZN PE Ratio data by YCharts

Amazon

P/E ratio: 82.5

Forward P/E ratio: 68.2

For most investors, Amazon needs no introduction. Considering its dominance in e-commerce, you likely buy things from it often, and, given that Amazon Prime now has more than 100 million subscribers, you're likely among those benefiting from the loyalty program's many benefits, including one-day shipping. If you own a smart speaker, chances are its Amazon's Alexa, which owns some 70% of the smart home devices market.

At the same time, if you work for a company, whether it's a start-up or one of the world's largest enterprises, some of your employer's digital workload is likely carried by Amazon Web Services, the pioneer and market share leader in cloud computing.

Not only has Amazon innovated its way into dominating the e-commerce, smart speaker, and cloud computing markets, it's also rapidly expanding into two more massive markets: shipping for third-party sellers, and healthcare.

Finally, it's also making waves in the highly profitable digital advertising business -- not only growing digital ads on its e-commerce site, but also reaping the benefits of ad-supported over-the-top streaming services distributed via its Fire TV sticks. According to eMarketer's projections, Amazon's digital ad revenues reached nearly $10 billion in 2019, up 33% compared with 2018.

It should be noted that it wasn't Buffett who himself who had Berkshire Hathaway buy Amazon stock during the first half of 2019, but rather one of his two younger lieutenants. At the Berkshire Hathaway annual meeting in May, Buffett was asked about the purchase, as Amazon's stock seemed expensive for a value-investing shop like Berkshire. Buffett responded:

... The idea that value is somehow connected to book value or low price/earnings ratios or anything -- as Charlie has said, all investing is value investing. I mean, you're putting out some money now to get more later on. And you're making a calculation as to the probabilities of getting that money and when you'll get it and what interest rates will be in between. And all the same calculation goes into it, whether you're buying some bank at 70% of book value, or you're buying Amazon at some very high multiple of reported earnings. Amazon -- the people making the decision on Amazon are absolutely as much value investors as I was when I was looking around for all these things selling below working capital, years ago. So, that has not changed.... 

Obviously, whoever chose to add Amazon to Berkshire's portfolio thinks that its cash flow potential is being masked by its massive, moat-widening investments. He's not the only one.

StoneCo

P/E Ratio: 68.2

Forward P/E ratio: 40.6

The decision on StoneCo, too, was made by one of Buffett's lieutenants, and the stock is unique for Berkshire: Not only does it appear to be an expensive growth stock, but it's also a Brazilian company. Founded in 2000, StoneCo has a similar model to Square, offering point-of-sale terminals and digital checkout services for merchants, but in a country where 85% of transactions are still done in cash.

That means that the War on Cash has quite a long way to go in Brazil. In addition, leading payments companies all over the world have shown that its quite a "sticky" business model: Once a company adopts a payments provider, it's a big headache to switch.

StoneCo had a great 2019, with the stock surging 116.3%. Despite a setback in April when Itau Unibanco announced a rival product, StoneCo rallied in the back half of the year on strong growth, seemingly putting those competitive concerns to rest. Last quarter, revenue surged 71% in U.S. dollars, with margin expansion leading to a whopping 212% growth in adjusted net income. Importantly, the company was able not only to grow gross merchandise volume but also increase its take rate -- the fees it charges its merchants. Pricing power is another sign of a wide competitive moat, so it's not so surprising that StoneCo has found its way into Berkshire's portfolio.