With the market fading amid rising concerns about the Federal Reserve’s ability to facilitate a soft landing for the economy, I’ve got to make a change to my original ideas for the “only” Warren Buffett stocks to buy.
To break the fourth wall a bit, I hope you realize that I’m in no way advocating that I own the exclusive domain of what Warren Buffett stocks to buy (and by logical deduction, which ones to avoid). He’s the Oracle of Omaha. I’m just a random nobody on the Internet. We just have to play the game for our SEO overlords.
Anyways, with pessimism baking into the major indices, it’s time to focus on enterprises that can go the distance in trying times. In others, you should bet on America the smart way. With that, below are Warren Buffett stocks to consider amid this turmoil.
Warren Buffett Stocks: Johnson & Johnson (JNJ)
Personally speaking, healthcare giant Johnson & Johnson (NYSE:JNJ) practically sells itself as one of the Warren Buffett stocks to buy. One of the least-exciting opportunities in the market, J&J makes up for its boring stature with an established, relevant business. And this business features the qualities that delight the Oracle of Omaha.
First, the company is consistently profitable, printing 10 years of net income over the past decade. Further, J&J enjoys a trailing-year operating margin of 25.5%, beating out 91.33% of its drug manufacturing peers. It also features a return on equity (ROE) of 17.46%, outpacing nearly 87% of sector rivals.
Second, the company pays a dividend, specifically a forward yield of 2.76%. As well, it commands 62 years of annual dividend increases. Finally, analysts unsurprisingly dig JNJ, pegging it a consensus moderate buy. Their average price target lands at $182, implying almost 6% upside. It’s not groundbreaking but it gets the job done.
Kroger (KR)
Another idea on this list of Warren Buffett stocks that sells itself, grocery stalwart Kroger (NYSE:KR) should be on your watch list, irrespective of who’s recommending it. Fundamentally, Kroger operates on the lower rungs of the trade-down effect. Basically, consumers may trim down their visits to restaurants, which should help cynically lift demand for the grocer.
Further, Kroger benefits in another way. It’s difficult to trade down from the company unless you’re willing to compromise your health with discount mystery meat. I don’t think it’s a coincidence that KR gained 2% in the week ended Aug. 18 while the S&P 500 fell 2%.
Moving on, what makes KR so compelling as one of the Warren Buffett stocks to buy is the favorable financials. You have solid long-term revenue growth and a forward earnings multiple that sits below 89% of the competition. Again, it’s no surprise that KR carries a moderate buy consensus view. In addition, analysts target a share price of $51.91, implying over 9% upside.
Warren Buffett Stocks: Charter Communications (CHTR)
An American telecommunications and mass media company, Charter Communications (NASDAQ:CHTR) presents a bit of a risk. At the same time, CHTR arguably demonstrates the spicier side of Warren Buffett stocks. Since the start of the year, shares gained over 23% of equity value. However, it had a rough outing last week amid the aforementioned rising economic concerns.
However, as a communications giant, so many people depend on Charter, which conducts services under the brand name Spectrum. In the current century, having fast Internet access is almost as vital as water. I’m being hyperbolic, but I’m also not. No high-speed Internet means you’re dead in the water in this economy.
Plus, CHTR may be a bargain. Despite a strong three-year revenue growth rate (per-share basis) of 17.1%, CHTR features a price/earnings-to-growth (PEG) ratio of 0.73x, favorably below 78% of its peers. Lastly, analysts peg shares as a moderate buy with a $480.77 price target, implying over 14% upside potential.
Chevron (CVX)
As a massive integrated hydrocarbon energy giant, Chevron (NYSE:CVX) may initially cut a strange profile for Warren Buffett stocks. Doesn’t the Oracle of Omaha know that the future of transportation and mobility is electric? It very well might be. However, I’d like to think that Buffett recognizes that the widescale integration of electric vehicles will take a long time. In the meantime, we have big oil.
Thanks to geopolitical flashpoints, supply concerns and social normalization trends among other factors, the energy market is finally moving. To be fair, CVX remains down almost 8% for the year so it hasn’t helped yet. However, in the trailing month, shares returned 4% of market value.
Even better, the company prints a solid three-year revenue growth rate of 18.1%. It’s highly profitable with a net margin of 14.09%. And aside from the Covid-19 hiccup, Chevron has consistently posted annual net income. In parting, analysts peg CVX as a consensus moderate buy with a $188.76 price target, implying over 17% upside potential.
Warren Buffett Stocks: Mastercard (MA)
A bit of a controversial idea for Warren Buffett stocks, Mastercard (NYSE:MA) may nevertheless present an important opportunity. I say controversial for the reason that Americans carry way too much credit card debt: we’re talking $1 trillion, according to a recent CNN report. Now, I must point out the obvious: a financial services firm and credit card provider like Mastercard represents a cynical beneficiary.
Still, Mastercard does carry risks. Sure, Americans being slaves to “plastic” debt bolsters the credit card industry to a point. If the economy really tanks, Mastercard may hurt badly as it tries to shake down the American public. However, if the status quo can somewhat be maintained, MA is worth a look for speculators.
While MA is hardly what you call good value, it does print a solid three-year revenue growth of 11.5%. Also, it’s consistently profitable with gargantuan margins. Plus, Wall Street loves MA, pegging it a unanimous strong buy with a $460.59 price target, implying over 17% upside.
Coca-Cola (KO)
As a big fan of junk food and beverages, Coca-Cola (NYSE:KO) is perhaps the most iconic name among Warren Buffett stocks. Leveraging its soft drink business, Coca-Cola is essentially a symbol of American-style capitalism. At the present juncture, the company also represents a downwind beneficiary of the trade-down effect.
Right now, circumstances operate somewhat normally within the consumer economy. However, brewing evidence suggests that people are really hurting. For instance, they’re deferring replacement car purchases by holding onto their vehicles for record time. Eventually, we may see consumers eschew getting their caffeine at pricey coffee shops, and instead choose the grocery store. That would play right into Coca-Cola’s hands.
To be fair, KO does not offer a fundamental discount. However, it benefits from blistering margins which lead to consistent printing of net income. Overall, analysts peg KO as a consensus strong buy. This breaks down as 10 buys and only one hold. Further, the expert price target lands at $71.82, implying nearly 18% upside potential.
General Motors (GM)
Perhaps my favorite idea for Warren Buffett stocks to buy, automaker General Motors (NYSE:GM) deserves more respect than it’s getting. Personally, that’s a big statement for me because I’m not into the domestic auto scene. However, I can respect smart business decisions. The way GM has invested in EVs while refusing to alienate gearheads with its eighth-generation Corvette demonstrates both passion and competence.
Not only that, the company can leverage its iconic combustion-powered models and electrify them. It’s doing that with the Hummer and its designers have plenty of room to work with. Moving forward, it may be GM that dominates EVs, not that other company.
Plus, GM offers an excellent value proposition. Right now, shares trade at a 4.29x forward multiple. As a discount to projected earnings, the company ranks better than 93.49% of its peers. On a final note, analysts peg GM as a moderate buy with a $50.27 price target, implying nearly 52% upside potential.
On the date of publication, Josh Enomoto 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.