Warren Buffett’s investment strategy has long focused on finding undervalued stocks with strong long-term potential. For investors looking to follow in his footsteps, identifying undervalued Buffett stocks to buy in 2023 is an excellent place to start.
But with so many available stocks, which are the best Buffett stocks to consider? This article will examine the three most undervalued Buffett stocks to buy in May 2023, offering investors a solid starting point for their investment portfolios.
By focusing on undervalued Buffett value stocks, investors can take advantage of the Oracle of Omaha’s time-tested approach to investing, while potentially realizing significant gains over the long term.
Buffett’s impressive investment record has earned him legendary status. As a result, concentrating on his stock picks can bring peace of mind.
So, let’s look at the top three undervalued Buffett stocks to consider in 2023.
| GM | General Motors | $31.71 |
| UPS | United Parcel Service | $173.55 |
| CVX | Chevron | $156.62 |
General Motors (GM)
General Motors (NYSE:GM) is a stock on the radar of value investors. GM has been one of the best Buffett stocks to buy in recent years because of its solid fundamentals and undervaluation.
GM is the second largest U.S. electric vehicle maker and plans multiple EV launches in 2023 including the Silverado EV will launch to fleets in Q2, the Blazer EV is coming this summer and the Equinox EV later this year.
GM’s commercial unit, BrightDrop, aims for $1 billion in revenue. This year, it will increase the delivery of electric vans.
GM aims to achieve $225 billion of total revenue by 2025, including at least $50 billion from electric vehicles. Economies of scale and falling battery costs will drive profitability in the electric vehicle business by then.
GM aims to attain a revenue of approximately $300 billion by 2030 while simultaneously expanding its operating margins to the low teens as part of its long-term objectives.
Additionally, the company’s self-driving unit, Cruise, is expected to generate revenue of $50 billion by 2030.
Although GM’s results may fluctuate with the economy, it’s in a good place to lead the EV industry. Its balance sheet’s strong, with $21.4 billion cash and $16.4 billion debt, which provides stability.
GM is an ideal Buffett stock since it’s a dominant player in a concentrated industry with growth potential and an attractive valuation, making it a long-term investment.
Its focus on electric vehicles and autonomous driving tech makes it one of the best Buffett stocks in 2023. Therefore, it’s an undervalued Buffett value stock to watch and one of the best Buffett stocks to buy in 2023.
United Parcel Service (UPS)
United Parcel Service (NYSE:UPS) has been doing poorly recently.
UPS stock had its biggest one-day drop in three years because of weak Q1 2023 results and revised guidance.
The package delivery company’s new forecast predicts 2023 revenue of $97 billion, a 12.8% adjusted operating margin, and $5.4 billion in dividend payments. This would end UPS’ recent strong growth trend, including 2022’s 10-year revenue high of over $100 billion and a 13% operating margin.
Despite a potential all-time high dividend payment of $5.4 billion, UPS faces revenue, and operating margin declines because of challenging macro conditions and consumer behavior changes.
UPS is continuously implementing a series of measures to improve its margins. CEO Carol Tome’s “better, not bigger” framework guides the company’s approach, focusing on maximizing existing assets and enhancing network productivity.
In addition, UPS is showing a greater willingness to be selective in its deliveries rather than pursuing volume for the sake of it. The company is shifting its focus to prioritize profitable deliveries, resulting in a more profitable business model.
Under Tomé’s leadership, UPS has focused on growing margins over volume, partnering with high-margin customers like big businesses, healthcare providers, and international deliveries.
This strategy differentiates UPS from competitors and has proven successful, as the company earns more from these categories than from residential deliveries.
Overall, UPS has strong potential as a long-term core holding due to its excellent management team led by CEO Carol Tomé. The recent weakness is a great reason to purchase more of this undervalued Buffett stock.
Chevron (CVX)
The stock market’s volatility can scare investors, but resilience is key to building long-term wealth. Following successful investors like Warren Buffett can calm nerves, especially when investing in dividend powerhouses like Chevron (NYSE:CVX), with a yield of 3.68%.
Warren Buffett’s portfolio includes a $28.6 billion stake in Chevron, an oil supermajor. The Oracle of Omaha purchased Chevron stock in Q4 2020, making up approximately 8.2% of his portfolio.
Chevron’s status as a premier dividend opportunity among energy stocks makes it no surprise that Buffett is enthusiastic about its stocks. The Big Oil company has hiked its dividend distribution for 36 consecutive years.
According to management’s dividend policy, it plans to continue for the next five years, provided that the benchmark oil price, Brent Crude per barrel, averages above $50.
Want to continue reading about long-term stock picks? Well, you are in luck! Here is a great article from Larry Ramer about seven great picks to power your portfolio. And once you finish that list, check out this piece from Josh. Happy reading and investing!
On the publication date, Faizan Farooque did not hold (directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
