As of the end of the third quarter, Warren Buffett's Berkshire Hathaway (NYSE:BRK-A) (NYSE:BRK-B) has nearly $55.8 billion in cash and equivalents in its balance sheet. Buffett has stated his intentions to keep cash balances above $20 billion to have enough financial flexibility, but that still leaves a lot of money available for investments and acquisitions.

It's hard to tell what Buffett is buying next, however, taking a look at some alternatives that could fit his investment criteria sounds like a smart way to identify high-quality investment opportunities. PepsiCo (NASDAQ:PEP), Starbucks (NASDAQ:SBUX), and Hershey (NYSE:HSY) are three interesting candidates to consider from this point of view.

Warren Buffett is a big fan of Coca-Cola (NYSE:KO), not only the drink, but also the brand and the business. While Coca-Cola and PepsiCo are direct competitors in soft drinks, the fact is that Coca-Cola won the cola wars back in 2010, when Diet Coke overtook Pepsi as the second most sold soda brand in the U.S. This means Coca-Cola got the first and second market positions with the flagship Coca-Cola brand and Diet Coke, respectively, relegating PepsiCo to the third place.

However, PepsiCo's leadership in the global snacks business is an invaluable asset for investors in the company. While soda sales volume is stagnant or even declining in developed markets due to health concerns, PepsiCo delivered a solid increase of 3% in organic revenues during the third quarter. Coca-Cola, on the other hand, announced a smaller increase of only 1% in comparable currency-neutral sales during the period.

Source. PepsiCo

Warren Buffett is all about competitive strengths, and PepsiCo's is second to none when it comes to competitive advantages in its industry. The company owns 22 brands that bring in more than $1 billion each in annual sales, besides, scale advantages and its colossal global distribution network provide additional sources of competitive strength.

The trend toward healthier eating and drinking habits will represent a considerable challenge for PepsiCo over the coming years, but the company has the resources to adapt to changing consumer demand. Widely successful brands such as Gatorade, Tropicana, and Quaker, among others, are showing that PepsiCo is smartly expanding its portfolio of products targeted toward health-conscious consumers.

PepsiCo has leveraged its competitive strengths and abundant financial resources to deliver growing dividend payments for investors over the long term, the company has raised dividends over the last 42 years uninterruptedly. The dividend yield is 2.7%, in line with Coca-Cola's dividend yield of 2.9%, and quite an attractive valuation for such a dividend powerhouse.

The quality of the management team is of utmost importance to Buffett, and Starbucks is run by one of the most successful and recognized CEOs around. Howard Schultz, founder and CEO of Starbucks, has practically invented specialized coffee as a popular product category, and in the process he has led Starbucks from a small bunch of coffee stores in Seattle to an international empire with more than 21,300 stores around the world and growing at full speed.

The business is performing remarkably well for a company of its size: Global comparable sales increased 5% during the last quarter, representing the 19th consecutive quarter with comps growing at 5% or more. Adjusted earnings per share jumped by an impressive 23% year over year.

Source: Starbucks

Judging by the strong growth in same-store sales that Starbucks is reporting across geographies, demand remains remarkably healthy, both in mature markets like the U.S. and in underpenetrated emerging markets. This is indicating that new stores are not cannibalizing sales at existing locations too much, showing that Starbucks still has plenty of room for expansion.

Starbucks completed the roll-out of La Boulange food offerings to all stores in the U.S. in August. Teavana products are producing incremental revenues at Starbucks stores in North America, and the company already has 60 Teavana tea bars in place. The innovation pipeline at Starbucks is stronger than ever, and this bodes well for investors in terms of growth potential in the years ahead.

Starbucks trades at a P/E ratio of 28.7, a considerable premium versus an average P/E ratio of 18.6 for companies in the S&P 500 Index according to data from Morningstar. However, a valuation premium is easy to justify based on the company's quality and financial performance, so investors should keep this in mind when deciding what price to pay for Starbucks stock.

Buffett loves consumer names with strong brands and market leading positions in stable industries with predictable long-term demand, especially if they generate tons of cash flows on a recurrent basis, and Hershey fits that description quite well.

The company owns widely popular brands such as Hershey's, Reese's, Kit Kat, Jolly Rancher, and Kisses, among several others. Management estimates that Hershey has a mouthwateringly sweet market share of nearly 44.5% of the U.S. chocolate market.

Source: Hershey

More than 70% of revenues currently come from the U.S. and Canada, but international markets are a major growth driver for Hershey. The company announced a big increase of 18.4% in international sales during the last quarter, and management plans to produce nearly 50% of sales from markets outside North America by 2018.

Fluctuating commodity prices can have a considerable impact on profit margins on a quarter to quarter basis, however, Hershey has remarkable cash flow generation capabilities. The company translated nearly 12% of revenues into free cash flows last year -- that allows plenty of flexibility when it comes to distributing capital to investors via dividends and buybacks.

Hershey trades at a P/E ratio of 26.2, and the stock yields 2.1% in dividends at current prices. The P/E ratio is relatively expensive, while the dividend yield is in line with that of the S&P 500 Index. Once again, premium companies deserve a premium valuation, in the words of Warren Buffett himself: "It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price." 

In a nutshell, PepsiCo, Starbucks, and Hershey are remarkably solid businesses offering many of the characteristics that Warren Buffet appreciates in a company, so maybe they are poised for strong returns over the years ahead.