Warren Buffett, the legendary investor and CEO of Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B), has a keen eye for value stocks that are poised for growth. In recent months, he has been selectively adding to positions in companies he believes are undervalued and have significant upside potential. According to Berkshire Hathaway’s latest 13F filing, Buffett boosted his stakes in just five stocks during the second quarter of 2023. However, given how rapidly market conditions can change, some of the best Buffett stocks to buy now likely extend beyond these recent purchases.
In this article, I will explore seven stocks that the Oracle of Omaha has been accumulating ahead of what he anticipates will be strong growth. Specifically, I will look at some of the five companies he added to based on the latest regulatory filings, along with a couple of stealth investments uncovered by my research into his other portfolios. While Buffett’s reputation is built on long-term investments, the stocks covered here appear poised for immediate gains as well.
Of course, it is important to point out that even the best investors can be wrong about market movements. So, we will analyze each pick carefully, including the likely investment thesis as well as the potential risks. Notably, what Buffett bought a few months ago isn’t necessarily a good buy right now, at least in my opinion. Thus, I will be excluding picks that don’t make sense right now. Let’s have a look at the following seven Warren Buffet stocks to buy right now.
Berkshire Hathaway (BRK-A, BRK-B)
Without a doubt, Berkshire Hathaway stock is Warren Buffett’s favorite stock to buy, as he has been consistently buying up shares of his own company. Berkshire Hathaway’s performance has been undeniable, and the time-tested company has continued to outperform in 2023. In the second quarter alone, Berkshire repurchased over $1.4 billion worth of its own shares.
Buffett clearly sees Berkshire as undervalued and an attractive investment opportunity even at current levels. The conglomerate reported a stunning $71.4 billion in operating earnings in the first half of 2023, showcasing the earnings power of Berkshire’s wide-moat businesses like Geico, BNSF Railway, and its manufacturing, service, and retail operations. Furthermore, Berkshire’s $147 billion cash pile gives it an “elephant gun” for hunting down whole companies or other major investments at good prices. With Buffett at the helm, Berkshire Hathaway remains a long-term compounding machine.
Capital One Financial (COF)
Capital One (NYSE:COF) is one of the five companies Warren Buffett boosted his stake in during Q2 2023, based on recent regulatory filings. He increased his position by more than 25%, making it among Berkshire’s top 25 holding. I’m unsure if Buffett is completely bullish with this name, even considering his current additions. However, I believe this is a great long-term pick due to its cheap valuation. The stock price has almost halved over the last two years, and now trades at just 8-times forward earnings.
Sure, there are fears about the banking and financial sector in general. However, with the Federal Reserve showing willingness to bail out banks earlier this year, I believe the fears are a little excessive. Capital One reported strong Q2 earnings, with revenue topping estimates. It is aggressively cutting expenses to protect margins in a challenging environment. Furthermore, its consumer business remains robust, with ending loans and revenue up 18% each year-over-year. As macroeconomic uncertainty eventually fades, the market may realize Capital One is undervalued, providing upside for investors buying at today’s prices.
Coca-Cola (NYSE:KO) is one of the most consistent Warren Buffett stocks (evidenced by its low beta), and while Berkshire Hathaway did not add to its position in KO stock this past quarter, Warren Buffett’s New England Asset Management did. This consumers staples company will continue churning out cash and paying dividends, making it a great buy right now, even if it faces some short-term selling pressure. Coca-Cola reported strong Q2 2023 earnings, with 11% organic revenue growth and earnings per share growth of 11% as well.
The company continues to gain market share globally, and has pricing power even in the face of inflation. Coca-Cola also pays a dividend yielding around 3.3%, and is less susceptible to economic downturns than other sectors. With its diversified portfolio of beverages and presence across 200 countries worldwide, Coca-Cola has what it takes to deliver stable returns regardless of market conditions. While not the most exciting stock, it is a core Buffett holding for good reason.
Sysco (NYSE:SYY) is another stock Warren Buffett’s NEAM has been stockpiling that is poised for strong growth. His firm expanded its position in this name by 15%. Sysco has lost nearly 20% of its value from its peak, and now sits well below its pre-pandemic highs. Further short-term downside risk remains as inflation could continue squeezing margins.
However, entering this stock at today’s levels will likely lead to juicy long-term gains. Sysco is the global leader in food distribution, giving it economies of scale and pricing power that smaller rivals lack. The reopening of restaurants, hotels, and other hospitality businesses Sysco serves also provides a multi-year tailwind. Notably, the company has also been cutting costs and improving efficiency.
This is reflected in the company’s recent results, in which Sysco reported sales growth of more than 4%, and earnings per share that beat estimates. Notably, SYY stock provides a dividend yield which is now an attractive 3% as well. With that in mind, its dominance and margin drivers make it one of the best Warren Buffet stocks to own for the long-run.
JPMorgan Chase (JPM)
JPMorgan Chase (NYSE:JPM) is one of the top lending institutions globally. Rest assured, I am almost certain that this business will not go underwater, no matter what. JPMorgan has been one of the strongest financial stocks, which is why it is also one of Berkshire Hathaway’s holdings and one of the stocks that NEAM bought in its latest reported quarter.
In the most recent quarter, JPMorgan Chase reported earnings per share of $4.75 on revenue of $41.31 billion, handily beating estimates. The company has produced stellar results this year, even in a challenging macroeconomic environment, thanks to strength across business lines, including investment banking, trading, consumer banking, and more. Revenue soared 34% year-over-year.
JPMorgan Chase increased its net interest income guidance for the full year 2023 to approximately $87 billion, driven by higher rates and slower deposit repricing than previously assumed. The bank grew its CET1 capital ratio to 13.8% and received approval for a lower Stress Capital Buffer requirement of 2.9% starting in its Q4 2023. This will allow JPMorgan Chase to return more capital to shareholders.
While uncertainties remain relating to the forward economic outlook, competition for deposits, and pending finalization of Basel III rules, JPMorgan Chase remains optimistic about generating continued excellence through diverse conditions. The company has an unmatched competitive position and balance sheet. JPMorgan Chase currently trades at around 10-times forward earnings, which is toward the lower end of its historical range.
Given its dominant position and ability to produce consistent returns across cycles, JPMorgan Chase stock appears attractively valued. This Buffett stock remains a long-term compounder to own. It is definitely one of the top Warren Buffett stocks to buy right now.
D.R. Horton (DHI)
I believe D.R. Horton (NYSE:DHI) stock offers substantial upside, but it is also quite risky right now due to its connection with the housing market. My personal rating here would be “hold” because it could make strong moves either way, considering where the broader economy goes.
In its fiscal 2023 third quarter, D.R. Horton generated $3.90 of earnings per share on revenues of $9.73 billion, soundly beating estimates. The company continues to see strong demand conditions, with consolidated net sales orders up 10.7% year-over-year. D.R. Horton also drove gross margin expansion and reduced construction cycle times by over a month.
However, the housing market faces considerable uncertainty looking ahead. Rising mortgage rates have impacted affordability, slowing the frenetic pace of demand over the past couple of years. D.R. Horton has adapted by lowering prices and increasing buyer incentives. But if demand were to drop more meaningfully, it would likely pressure homebuilding profit margins.
On the other hand, D.R. Horton maintains a fortress balance sheet with ample liquidity and low leverage. This gives it the flexibility to invest in growth and weather downturns better than rivals. D.R. Horton also has an industry-leading scale, geographic diversification, and an efficient operating model that produces industry-topping returns on capital.
With its wide moat, D.R. Horton seems poised to continue taking market share profitably despite housing market fluctuations. But this uncertainty merits caution, until we gain more clarity on the economy and housing market. This makes DHI stock a “hold” for now.
Occidental Petroleum (OXY)
Likewise, Occidental Petroleum (NYSE:OXY) is also a little speculative, but could soar in the coming weeks. It all depends on the price of oil. Should the economy see the so-called “soft landing” economists think is possible, we will likely see elevated oil prices for quite some time. Conversely, a recession or economic slump could imply at least a 30% downside from here, in my opinion. However, I still believe this stock is a buy over the long-run due to the company’s oil reserves, as well as its impressive dividend.
In Q2 2023, Occidental generated adjusted earnings per share of $0.68, missing expectations. However, total production beat guidance by 42,000 BOE per day, as operational execution continued humming. Occidental raised its full-year 2023 production outlook and generated over $1 billion of free cash flow, even with planned maintenance downtime.
Occidental bought also back $425 million of common shares in Q2 and has now completed about 40% of its $3 billion repurchase program. It also redeemed another $520 million of preferred equity. Occidental believes it can sustain shareholder payouts above $4 per common share at oil prices of $75 per barrel or above. Yet, shares trade very cheaply at just 7-times earnings. It’s not my first pick regarding Warren Buffett stocks, but the OG investor knows best!
On the date of publication, Omor Ibne Ehsan did not have (either 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.