- In times of market volatility, investors should pay close attention to Warren Buffett stocks that may offer investment opportunities.
- Amazon (AMZN): Hiccup in Q1 results and market headwinds have created a better buying opportunity.
- American Express (AXP): As the world begins to normalize and spend more, the financial giant could be on track for a big comeback.
- Apple (AAPL): The tech powerhouse is enjoying record revenue with its well-received new products.
- Berkshire Hathaway (BRK-A, BRK-B): Warren Buffett’s conglomerate is standing the test of time despite market headwinds.
- Citigroup (C): Rate hikes hit the financial giant‘s profitability, bringing C stock to a more affordable price.
- HP (HPQ): Dividend-paying tech giant is at 52-week lows, opening a window of buying opportunity.
- Occidental Petroleum (OXY): This energy name should continue to benefit from high oil prices.
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When Wall Street gets the jitters, investors want to hear more about Warren Buffett stocks. The U.S. stock market posted its first quarterly loss in two years amid worries of soaring inflation, geopolitics and a tight monetary policy. As a result, the S&P 500 Index and the Nasdaq 100 dropped 4.6% and 8.9%, respectively.
Meanwhile, Warren Buffett’s Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B) increased its portfolio value to $364 billion over the same period. We get a snapshot of the group’s holdings in the latest 13F filing with the Securities and Exchange Commission (SEC).
In summary, the Oracle of Omaha purchased new stakes in eight companies and increased shares in seven names in Q1. On the other side of the equation, he reduced holdings in four firms and sold out of three stocks.
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With that information, here are seven Warren Buffett stocks that might inspire readers to create long-term wealth during these uncertain times.
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52-week range: $2,025.20 – $3,773.08
Amazon (NASDAQ:AMZN) is the world‘s best known e-commerce company and has a major foothold in cloud services, smart devices and entertainment businesses. For instance, in recent weeks, Amazon announced that it acquired MGM Studios.
The tech giant issued first-quarter results on April 28. Revenue increased by 7% to $116.4 billion year-over-year (YOY). However, net loss per diluted share was $7.56, compared with a net income of $15.79 per diluted share for the first quarter of 2021. Moreover, free cash flow (FCF) turned negative to an outflow of $18.6 billion compared to an inflow of $26.4 billion for the same period a year ago.
On these results, management cited the negative effects of inflationary and supply chain pressures. It also reiterated its focus on improving productivity and cost efficiencies throughout Amazon’s fulfillment network.
Investors are now looking forward to June 3, when Amazon shares will split 20-for-1. In other words, if the current price level holds, AMZN shares should trade around $100 afterward.
AMZN stock has lost nearly 33% year-to-date (YTD). Shares are trading at 47.6 times forward earnings and 2.3 times sales. Meanwhile, the 12-month median price forecast for Amazon stands at $3,625. Understandably, this price will soon change to reflect the stock split.
American Express (AXP)
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52-week range: $149.71 – $199.55
American Express (NYSE:AXP) is one of the world’s leading payment companies. Starting out as a freight forwarder in 1850, the company has evolved into a financial powerhouse providing payment and collection services for consumers and businesses. Berkshire Hathaway owns 20% of American Express’ outstanding shares and is by far the company’s largest shareholder.
AXP released Q1 results on April 22. Revenue came in at $11.7 billion, up 29% YOY. Diluted earnings per share (EPS) came in at $2.73 compared to $2.74 for the first quarter of 2021.
Management highlighted that its long-term investment initiatives have started to pay off, delivering strong results for the past few quarters. Given high retention rates and new membership acquisitions, the company expects 18% to 20% revenue growth for 2022.
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AXP stock is effectively flat YTD. Meanwhile, the current price supports a dividend yield of 1.3%. Shares are priced at 15.8 times forward earnings and 2.6 times sales. The 12-month median price forecast for AXP is at $200.
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52-week range: $123.13 – $182.94
Apple (NASDAQ:AAPL) is the third-largest company on the Fortune 500 list for 2021. The consumer tech giant designs and manufactures smartphones, personal computers, tablets, wearables and accessories. Apple shares represent more than 40% of the assets in Berkshire Hathaway’s equity portfolio.
Management reported Q2 2022 financials on April 28. Revenue was $97.3 billion, up 9% YOY. Earnings per diluted share were $1.52. More than $28 billion in cash was generated, and $27 billion was distributed to shareholders during the quarter.
AAPL stock has dropped nearly 19% YTD but has still appreciated by 18% over the past 12 months. Shares are changing hands at 22.6 times forward earnings and 5.9 times sales. The dividend yield is 0.7% and the 12-month median price forecast for Apple stands at $190.
Berkshire Hathaway (BRK-A, BRK-B)
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BRK-B stock 52-week range: $270.73 – $362.10
Berkshire Hathaway is headed by Warren Buffett, one of the greatest investors ever. Besides a number of subsidiary businesses, the group is well-known for its vast portfolio of stocks, handpicked by the Oracle of Omaha.
Management released Q1 results at the end of April. Net earnings per Class B share came in at $2.47 compared to $5.09 for the prior-year period. The conglomerate holding company spent approximately $3.2 billion to buy back its outstanding Class A and Class B shares.
For most retail investors, buying BRK-B stock is possibly the easiest way to replicate the investment approach followed by Buffett. Over the past five decades, Buffett’s team has delivered close to 21% in annual returns.
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BRK-B stock has risen almost 5% YTD and 9% over a 52-week period. Shares are trading at 22.9 times forward earnings and 2 times sales. The 12-month median share price forecast for Berkshire Hathaway is at $373.
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52-week range: $45.40 – $80.29
Citigroup (NYSE:C) has been getting increased attention in recent days thanks to Berkshire Hathaway, which has spent around $3 billion to acquire more than 55 million shares of C stock. The amount accounts for a 2.8% stake in the company.
The bank reported Q1 results on Apr. 14. Revenue came in at $19.2 billion compared to $19.7 billion in the first quarter of 2021, accounting for a decrease of 2.6% YOY. Diluted EPS for the quarter was $2.02 compared with $3.62 for the year-ago quarter.
Meanwhile, under the leadership of its CEO Jane Fraser, the financial powerhouse has been going under a significant transformation. Investors are hopeful that Citibank will emerge as a leaner and more efficient company with several segments that create consistent shareholder value.
Yet, since early 2022, Wall Street has been concerned about the potential effects of Citibank’s significant presence in Russia. In fact, C stock has declined 15% YTD and 32% in the past year.
Now, shares are trading at 7.4 times forward earnings and 1.4 times sales. The dividend yield is 3.9%. The 12-month median price forecast for Citigroup stands at $61.50.
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52-week range: $26.11 – $41.47
HP (NYSE:HPQ) is one of the key players in the information technology arena with its portfolio of personal computers (PCs), printers, mobile devices and related services.
During the pandemic, HP has benefited from increased digitalization. Then, last month, Berkshire Hathaway disclosed a stake in the PC and printer giant.
Management issued Q1 results at the end of February. Revenue was $17 billion, up 8.8% from the prior-year period. Diluted EPS of $1.10 came in above forecasts of 99 cents to $1.05. FCF was $1.4 billion.
HPQ stock is up only 1% YTD, but it has appreciated 20% over the past 12 months. The dividend yield is 2.7%. Shares are priced at 8.4 times forward earnings and 0.7 times sales. The 12-month median price forecast for HP stands at $36, which is lower than today’s price, but the high estimate of $50 leaves room for upside.
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Don’t forget Q2 results are due on May 31. Those who expect the tech group to increase revenue and net income could consider buying the stock around these levels.
Occidental Petroleum (OXY)
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52-week range: $21.62 – $69.17
Occidental Petroleum (NYSE:OXY) operates energy and chemical assets around the globe. Over the past year, oil and gas prices have been on a tear. Meanwhile, Berkshire Hathaway recently purchased approximately 5.9 million new shares and now owns about 15% of the company.
The energy play released Q1 results on May 10. Adjusted earnings per diluted share came in at $2.12 compared to adjusted earnings per diluted share of $1.48 for the year-ago quarter. Occidental repaid $3.3 billion of debt, corresponding to 12% of the principal. FCF before working capital resulted in a record high of $3.3 billion.
Investors are pleased that Occidental is paying off debt, which will help improve the balance sheet considerably. Given its strong cash generation, analysts are even debating whether Berkshire Hathaway could consider fully acquiring the company.
OXY stock has surged higher by 125% YTD and 168% over the past 12 months. Currently, the dividend yield is 0.8%.
Shares are trading at 16.9 times forward earnings and 2.1 times sales. Finally, the 12-month median price forecast for OXY stands at $73.
On the date of publication, Tezcan Gecgil 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.
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