In this article, we discuss the 5 cheap value stocks to buy according to Warren Buffett. If you want to read Berkshire Hathaway’s hedge fund performance and Warren Buffett’s investment philosophy, go directly to 12 Cheap Value Stocks to Buy According to Warren Buffett.
5. Occidental Petroleum Corporation (NYSE:OXY)
Value of Berkshire Hathaway’s 13F Position: $11.9 billion
Number of Hedge Fund Holders: 74
Occidental Petroleum Corporation (NYSE:OXY) is one of the oil and gas stocks that lost their value in the last month due to falling crude oil prices. The company stock went down by over 13% in the last 30 days as of December 21. Nevertheless, the US Energy Information Administration predicts that oil prices are going to receive a significant boost in price per barrel due to a higher demand than supply, which bears good news for Occidental Petroleum Corporation (NYSE:OXY) stock. The company stock is trading at a PE ratio of 6.9x as of December 21.
According to our database, the hedge funds having a stake in Occidental Petroleum Corporation (NYSE:OXY) increased from 66 in Q2 to 74 in Q3 2022. Berkshire Hathaway increased its holdings in the company by 23% in the quarter to 194.35 million shares, worth $11.9 billion in the September quarter, making it the leading shareholder of the company.
On December 7, Barclays analyst Jeanine Wai reiterated an Outperform rating on Occidental Petroleum Corporation (NYSE:OXY) and lowered the price target to $74 from $85 after the company’s Q3 results.
Here is what Smead Capital Management has to say about Occidental Petroleum Corporation (NYSE:OXY) in its Q3 2022 investor letter:
“Our top-performing stocks in the quarter includes Occidental Petroleum (NYSE:OXY). Oil and gas have been the best game in the stock market town this year and it was a pleasant surprise to see home builders pick up even with dour news on interest rates and the economy. For the first three quarters of the year, we should change the name of our fund to the Jed Clampett Fund. Occidental Petroleum (NYSE:OXY), was one of the standouts. Up through the bear market came a “bubblin’ crude!”
4. American Express Company (NYSE:AXP)
Value of Berkshire Hathaway’s 13F Position: $20.453 billion
Number of Hedge Fund Holders: 68
American Express Company (NYSE:AXP) is a New York-based payment processing company. As of December 21, the company is trading at a PE ratio of 14.6x and the stock price of $147.10 is leaning more toward the lower end of its 52-week range.
Among the hedge funds tracked by Insider Monkey, 68 of them had a stake in American Express Company (NYSE:AXP) in the third quarter, compared to 67 in the previous one. Berkshire Hathaway retained its position as the most prominent shareholder in Q3 with 151.61 million shares, valued at $20.453 billion, representing 6.9% of the fund’s portfolio.
As of December 21, American Express Company (NYSE:AXP) has a dividend yield of 1.41% with a 19.47% payout ratio. Its latest quarterly dividend of $0.52 was declared on December 7, payable by February 10 to the shareholders of record on January 6.
On December 15, Wells Fargo analyst Donald Fandetti reaffirmed an Overweight rating on American Express Company (NYSE:AXP)’s shares and raised the price target to $180 from $170.
Here is what ClearBridge Investments had to say about American Express Company (NYSE:AXP) in its Q2 2021 investor letter:
“In financials, American Express has done an excellent job demonstrating the resiliency of its franchise in the midst of a global pandemic that drove a 60% decline in its core travel and entertainment business. The company’s spend-centric model has been helped by fiscal stimulus ensuring a flush consumer, while management continues to execute well by adding millions of new consumer and small and medium business accounts, which should benefit the franchise over the medium to long term. We remain optimistic regarding the company’s prospects as travel and entertainment activity rebounds, adding to our position in the quarter.”
3. Chevron Corporation (NYSE:CVX)
Value of Berkshire Hathaway’s 13F Position: $23.757 billion
Number of Hedge Fund Holders: 66
Chevron Corporation (NYSE:CVX) is one of the largest oil and gas companies in the world. After achieving major profitability in the first three quarters of 2022, the company stock has lost 6.6% of its value as of December 21 and is trading at a PE ratio of 10x.
Chevron Corporation (NYSE:CVX) stock has shown a decline after crude oil prices dropped below $77 at the beginning of December. However, according to the US Energy Information Administration, the global oil supply will not be able to meet the global oil demand in 2023. The supply constraints are expected to boost Brent crude oil prices to an average of $95 in 2023. Oil and gas companies like Chevron Corporation (NYSE:CVX) will benefit significantly due to the price increase which is why it is on our list of cheap value stocks to buy according to Warren Buffett.
Chevron Corporation (NYSE:CVX) is a great dividend stock that has offered dividend increases for 35 consecutive years. As of December 21, the company has a dividend yield of 3.3% and a 34.4% payout ratio.
Berkshire Hathaway held over 165 million shares of Chevron Corporation (NYSE:CVX), valued at $23.757 billion in the third quarter of 2022. The company represented 8.02% of the firm’s portfolio.
Here is what Diamond Hill Capital to say about Chevron Corporation (NYSE:CVX) in its Q1 2022 investor letter:
“Other top contributors in Q1 included multinational energy company Chevron Corp. (NYSE:CVX). The company benefited from increased energy demand as COVID-related economic restrictions eased in tandem with concerns regarding supply interruptions related to Russia’s invasion of Ukraine.”
2. Bank of America Corporation (NYSE:BAC)
Value of Berkshire Hathaway’s 13F Position: $30.505 billion
Number of Hedge Fund Holders: 97
Bank of America Corporation (NYSE:BAC) is a banking firm that offers investment management, asset management, equities trading, mutual funds, and banking services along with many other services.
Berkshire Hathaway held over 1 billion shares of Bank of America Corporation (NYSE:BAC), valued at $30.505 billion in the third quarter of 2022. The firm represented 10.3% of the hedge fund’s portfolio. Moreover, two of the significant shareholders of the company, GQG Partners and Fisher Asset Management increased their holdings in Bank of America Corporation (NYSE:BAC) by 8732% and 1357%, respectively.
As of December 21, Bank of America Corporation (NYSE:BAC)’s shares have lost almost 30% of their value and its FWD PE ratio stands at 8.5x. Furthermore, 12 analysts have covered the company stock in the last three months, and their average price target stands at $39.82, compared to the current stock price of $32.68.
1. Apple Inc. (NASDAQ:AAPL)
Value of Berkshire Hathaway’s 13F Position: $123.66 billion
Number of Hedge Fund Holders: 140
Apple Inc. (NASDAQ:AAPL) is one of the largest companies in the world and is a part of the American Big Five tech companies. It serves worldwide and is considered one of the most valuable brands. Apple Inc. (NASDAQ:AAPL) covered the most significant part of Berkshire Hathaway’s portfolio with a 41.76% concentration in Q3 2022. The fund held 894.802 million company shares, worth $123.66 billion.
Apple Inc. (NASDAQ:AAPL) stock lost 25.58% of its value year-to-date on December 21 and is trading at a PE ratio of 21.6x. In comparison, its peer average PE ratio stands at 33.1x. Moreover, the company reported massive cash and cash equivalents of $24.646 billion, which makes it a safe stock and also gives it room for dividend and share repurchase growth. These factors make Apple Inc. (NASDAQ:AAPL) a cheap value stock in Warren Buffett’s portfolio.
On December 19, JPMorgan analyst Samik Chatterjee maintained an Overweight rating on Apple Inc. (NASDAQ:AAPL)’s stock with a $190 price target, down from $200. Out of 27 analysts covering the company stock, 23 of them maintain a Buy or Outperform rating with a $179.10 price target. In addition, even the lowest price forecast of $144 represents an upside from the current price of $135.45.
Here is what Alger Capital specifically said about Apple Inc. (NASDAQ:AAPL) in its Q2 2022:
“Apple Inc. (NASDAQ:AAPL) is a leading technology provider in telecommunications. computing and services. Apple’s iOS operating system is the company’s unique intellectual property and competitive strength. This software drives extremely tight engagement with consumers and enterprises. The engagement is fostering the growing purchase of high-margin services like music, apps, and apple pay. Apple’s shares detracted from performance as management lowered its guidance for the second quarter due to headwinds from the war in Ukraine, adverse foreign currency shifts, and dampened consumer demand associated with the coronavirus in China. Additionally, many investors were concerned that lockdowns implemented to curtail the spread of COVID-19 would impact production of apple products, however the manufacturing facilities have resumed activity.”
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