There is probably no investor more closely scrutinized than Warren Buffett. Whether by Wall Street analysts or individual investors, the Chief Executive Officer (CEO) of Berkshire Hathaway (NYSE:BRK-A)(NYSE:BRK-B) has his every buy, sell and hold decision dissected six ways to Sunday.
And it’s not without cause. Since becoming CEO at Berkshire in 1964, Buffett has generated over 4.7 million percent returns for investors. That’s a mind-boggling figure, particularly since the S&P 500 has only returned around 30,000%. Following Buffett’s moves might not be such a bad investing strategy.
What you will find is that while the Oracle of Omaha doesn’t mind picking up shares of stocks he owns when they’re rising, he will often scoop up handfuls when they fall. Buying stocks when they go on sale is a tried and true method of creating vast wealth.
Below are three Warren Buffett stocks to buy when prices tumble.
Chevron (CVX)
Oil and gas giant Chevron (NYSE:CVX) is riding a wave of fossil fuel demand higher. Global production is going to increase to help meet the need but not by nearly enough to offset rising demand. That will cause prices to increase and lift Chevron’s bottom line.
The second-largest integrated oil and gas stock behind Exxon Mobil (NYSE:XOM), Chevron will profit at each stage of energy’s lifecycle. From exploration and production to refining and transportation, to downstream retail sales, Chevron will have its fingers it the pie.
Yet the oil industry no longer engages in willy-nilly exploration. While that used to be an industry staple, Chevron, Exxon and others now take a more cautious and selective approach. More often than not, project development is reserved for only the most profitable projects. It is a more sustainable policy long term.
Consolidation is still key to further enhancements. Chevron is looking to acquire peer Hess (NYSE:HES) and its assets in Guyana. It could actually be a trigger for the stock to tumble, though, because Exxon says it has the right of first refusal of the assets. If Exxon wins, CVX stock could fall. That would be an excellent opportunity to acquire shares for the rebound.
T-Mobile (TMUS)
Telecommunications industry leader T-Mobile (NASDAQ:TMUS) is another stock to buy on a pullback. The wireless carrier’s shares are up 31% from their lows. Yet they could fall again as the year progresses.
T-Mobile leaped to the forefront of the mobile market, adding more customers than its rivals over an extended period of time. But that’s about to change.
In its just-reported first quarter earnings report, management left unchanged its expectations for postpaid phone customer increases even as it raised both profitability and free cash flow growth. Over the next few quarters, T-Mobile will begin implementing its “rate plan optimizations” program. It expects that will boost revenue per postpaid account 3% this year instead of the 2% previously forecast.
Those price hikes will temper customer acquisitions, which could cause the market to react negatively. As T-Mobile bolsters its bottom line, any pullback in the stock ought to be exploited. The carrier is improving the long-term health of the business at the expense of short-term catalysts, which is better for T-Mobile stock and investors overall.
Kroger (KR)
Supermarket giant Kroger (NYSE:KR) is the last Warren Buffett stock to buy if prices plunge. Even as its stock is up 22% in 2024, there are plenty of factors that could see it reverse course.
Kroger is still trying to buy rival Albertson’s (NYSE:ACI) amid ongoing opposition from the Federal Trade Commission (FTC). Due to an apparent lack of understanding of market dynamics, the agency’s antitrust lawyers ignore the very real competitive threats grocery stores face. While alleging the merger will lead to higher prices for groceries, lower quality products and services, and limit choices for consumers, they willfully ignore the threat Costco (NASDAQ:COST), Aldi, Lidl, and even e-commerce platforms like Amazon (NASDAQ:AMZN) present.
The Biden administration has essentially become the man with a hammer: everything looks like a nail. The agency has taken an almost blanket approach to denying large M&A transactions. It recently sued to stop Tapestry (NYSE:TPR) from buying Capri Holdings (NYSE:CPRI), opposed JetBlue Airways (NASDAQ:JBLU) buying Spirit Airlines (NASDAQ:SAVE), and tried to squash Microsoft‘s (NASDAQ:MSFT) acquisition of Activision Blizzard. Notably, the FTC has lost every single case it has opposed that went to court (like the Microsoft case) but many takeovers were also abandoned.
Killing the Albertson’s deal could crush Kroger stock. However, because Kroger is the largest pure-play supermarket chain with over 2,700 stores, it should remain a solid Buffett stock to buy in the event of prices crumbling.
On the date of publication, Rich Duprey held a LONG position in CVX and XOM stock. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
