Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B) CEO Warren Buffett is undoubtedly one of the world’s best investors. Accordingly, Warren Buffett stocks that are added to or divested of in a given quarter are ones that many pay close attention to. That’s because Buffett’s long-term record of generating superior returns has made him a household name among investors.
With market volatility on the rise, now could be an excellent time to buy Warren Buffett stocks for significant gains over the longer term. Of course, some investors may differ in their views with respect to certain sectors which are overweight in Buffett’s portfolio. That said, few can dispute his returns over time.
With that said, here are three Warren Buffett stocks to consider on market weakness in 2023.
|Bank of America
The most obvious choice to include in this list of Warren Buffett stocks is consumer electronics giant Apple (NASDAQ:AAPL). The largest company in the world, Apple has also been the largest holding in Buffett’s portfolio in recent years.
Like many economically-sensitive companies, Apple has been negatively impacted by supply issues and a deteriorating macroeconomic environment. Despite this, many investors may be curious whether now is a good time to buy AAPL stock. After all, as the iPhone market reaches maturity, investors are speculating about the future growth catalyst for Apple stock.
Recently, two business segments have been responsible for elevating Apple’s sales and profits: the services and wearables divisions. During the December quarter, Apple’s services division generated year-over-year (YOY) revenue growth of more than 6%, totaling $20.77 billion. On the other hand, its hardware sales experienced a drop of 8% to $96.39 billion. The services offered by Apple encompass a range of products and offerings, including the App Store, AppleCare, iCloud, Apple Pay, Apple Music, Apple TV+ and Apple Arcade.
Warren Buffett has been a big believer in Apple stock since 2016, when he first took a stake. He believes the tech giant’s sales and profits will grow significantly as new innovative products are launched. Furthermore, with an increasing dividend of 1.8% yield, he also views AAPL stock as generating income while providing solid capital appreciation potential.
Occidental Petroleum (OXY)
Occidental Petroleum (NYSE:OXY) is a broadly-diversified energy giant Buffett clearly likes. The company’s fully-integrated business model focuses on the production of oil and gas, of course, as well as basic materials, petrochemicals, polymers and special chemicals. Last year saw Occidental outperform many of its peers, in large part due to this diversified approach.
That said, Occidental’s oil and gas operations are seeing continuous improvements. In 2019, the company made a bold move to acquire Anadarko Petroleum, which involved significant debt and special financing from Berkshire Hathaway. However, the recent surge in oil prices has significantly strengthened its financial performance.
According to company leadership, as long as domestic oil prices remain above $40, its current operations can sustain its current dividend. Additionally, the company has channeled much of its surplus cash toward reducing debt.
With this information, there is no doubt Warren Buffett has been watching OXY stock for some time now. He is a known value investor, meaning he buys stocks at an attractive price and expects returns to be generated over the long term. I think most investors can make a long-term bet on Occidental, particularly if it drops throughout the calendar year.
Bank of America (BAC)
Bank of America (NYSE:BAC) operates as one of the United States’ largest banks, providing customers with various financial services. The bank’s revenues and profits have been resilient in the face of turbulent economic times thanks to its diversified operations in retail banking, corporate banking, wealth management, asset management and insurance services.
Like many of its peers, Bank of America received a boost in 2022 as the Federal Reserve began increasing interest rates. The Fed raised rates by 25 basis points in March followed by a 50 basis-point hike in May, and then continued to increase rates by 75 basis points at each of the four subsequent meetings. The year ended with another 50-point rate hike, resulting in a federal funds rate range of 4.25% to 4.5% for overnight loans between banks.
This all played a role in the bank’s strong performance in the latter half of the year. As of 2023, conditions remain favorable for Bank of America and similar to what was experienced in the previous year. The bank will likely continue to thrive in 2023, just as it did in 2022, with increasing net interest income mitigating potential losses in other areas.
I think Bank of America is a good investment opportunity right now. The company’s current price-to-earnings ratio of 11.1 times compares favorably to its historical average and recent ratios from 2020 and 2021. Thus, I think Bank of America is well-positioned to navigate this market and is trading at a reasonable valuation I could see Buffett continuing to add to on market weakness this year.
On the date of publication, Chris MacDonald has a position in AAPL. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.