Monday, April 15, 2024

Just Invest $300 for Warren Buffett Stocks to Buy Now

HomeStock-MarketJust Invest $300 for Warren Buffett Stocks to Buy Now

If you’re just getting started investing with a modest sum like $300, it can be daunting to pick stocks in today’s turbulent markets. That’s why many novice investors look to the “Oracle of Omaha” himself – billionaire Warren Buffett – for guidance on smart long-term value plays.

After all, Buffett’s Berkshire Hathaway conglomerate has racked up staggering returns over the decades by buying undervalued but solidly profitable companies and hanging onto them through rough patches. The investor’s “buy and hold” philosophy has made him one of the world’s richest people.

So which stocks is the venerable 92-year-old investing legend favoring lately for his $300+ billion equity portfolio? Let’s take a look at three reasonably-priced Buffett holdings that could make attractive starter positions for the aspiring investor working with just a few hundred bucks.

The Enduring Appeal of Coca-Cola

First up is one of Buffett’s longest-running investments – soft drink juggernaut Coca-Cola (KO). The beverage titan has been a Berkshire staple for over 30 years, with Buffett’s firm currently holding around 400 million shares worth $25 billion.

What’s the persistent appeal? For one, Coke products like its classic cola, Dasani water, Powerade sports drinks, and Gold Peak teas remain popular globally despite the rise of upstart rivals and changing consumer tastes. The company has been remarkably adaptable in its 130+ year history.

But the real key to Coca-Cola’s success – and its attraction for value investors like Buffett – is its thoughtfully designed business model emphasizing branding over bottling and distribution. Rather than dealing with the headaches of manufacturing, transportation and asset-intensive operations, Coke simply provides its signature syrups to a network of independent bottlers.

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This capital-light approach generates consistent profits and cash flows fueling yearly dividend increases each of the last 62 years. The stock’s current 3% dividend yield looks appealing for income-seekers too.

Sure, any stock trading at over 25 times earnings can’t be called a bargain. But Coca-Cola’s powerful global brand value, recession-resistant demand, and streamlined business make it a sturdy core portfolio holding – however modest your initial position.

The Steady Profits of Bank Stalwart BofA

Our next Buffett pick is Bank of America (BAC), the second largest U.S. retail bank that makes up over $30 billion of Berkshire’s equity holdings. Buffett has been fans of “the nation’s bank” for its strong deposit base, extensive branch network, and diversified revenue streams.

The banking sector has taken a beating this year amid fears of a potential credit crunch and recession squeezing lending profits. But BofA’s rock-solid balance sheet and careful risk management should help it weather this latest storm after surviving the brutal 2008 financial crisis.

Last quarter’s results show the bank’s resilience, with a relatively low 0.45% charge-off rate on soured loans and an 11.7% return on equity. While down from 2022’s peak, these metrics remain healthy considering the darkening economic outlook.

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Trading at just 12 times trailing earnings and yielding 2.6%, BofA shares look like a bargain compared to their early-2022 highs. The stock seems to be discounting an overly dire outcome that few expect from the well-capitalized “too big to fail” institution.

As a gigantic, diversified lender benefiting from higher interest rates, BofA’s fortunes should rebound once the current turbulence passes. Buffett’s multibillion bet on its long-term earnings power appears well-placed.

Energy Giant Chevron’s Bright Future

Our final Buffett pick may seem surprising given the global shift to renewable energy – Chevron (CVX), the $300+ billion oil and gas behemoth that’s the second-largest component of Berkshire’s equity portfolio at nearly $20 billion.

However, the reality is that hydrocarbons like petroleum and natural gas will be powering much of the world’s energy needs for decades yet. According to government forecasts, good old oil is projected to remain the single biggest energy source globally even out to 2050.

This sobering outlook reflects the immense challenges in rapidly transitioning away from fossil fuels to meet soaring energy demands, especially in developing nations. Renewables like solar and wind are growing explosively but still only make up 15% of U.S. energy consumption.

With those powerful tailwinds, Chevron’s hefty investments in oil and gas production are likely to keep gushing profits for the foreseeable future. The company’s low-cost, rapidly-depleting shale assets churn out cash flows to reward investors through thick and thin energy price cycles.

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Trading at less than 10 times earnings and yielding over 4% annually, Chevron stock looks quite reasonable considering its compelling long-term prospects. It’s a classic Buffett “value” play combined with an income stream.

Of course, no energy stock is immune to commodity price swings driven by economic forces and geopolitics. And Chevron must carefully navigate the eventual clean energy transition to avoid stranding assets down the line.

But with hydrocarbons so deeply embedded in the energy mix for now, this oil titan can likely keep rewarding shareholders in Buffett-approved fashion for many years to come.

Warren’s Wisdom for New Investors

While hot tech stocks and speculative crazes grab headlines, Warren Buffett’s value investing approach of buying great businesses at fair prices has been quietly compounding wealth for decades.

Stalwart consumer brands like Coca-Cola, dominant financial institutions such as BofA, and even old-economy resource plays like Chevron have been some of his most fruitful long-term holdings. These kinds of solidly-profitable companies with reasonable valuations can make great starter positions for young portfolios too.

Of course, every investor has a unique situation and time horizon to weigh. But when in doubt, channeling a bit of the Oracle’s timeless value approach can help keep you on a prudent financial path – even when just dipping your toes into the markets with a few hundred bucks.

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Mezhar Alee
Mezhar Alee
Mezhar Alee is a prolific author who provides commentary and analysis on business, finance, politics, sports, and current events on his website Opportuneist. With over a decade of experience in journalism and blogging, Mezhar aims to deliver well-researched insights and thought-provoking perspectives on important local and global issues in society.

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