Navigating the stock market lately feels like riding a rollercoaster. While stocks are rallying on the latest Fed rate decision today, and November offers the advantage of bullish seasonality, there are still plenty of reasons to be wary - from the ongoing conflict in the Gaza Strip, to a troubling lack of leadership from small-cap stocks amid the market's current bounce out of correction territory.
However, there's one way to take advantage of the market's pullback from its summertime highs - and any future dips, as well. By initiating or adding to long-term stock investments at lower prices, it's possible to achieve a more favorable cost basis over time, and maximize returns.
And when it comes to long-term investing returns, there's no one quite like Warren Buffett, a.k.a. the “Oracle of Omaha.” He's legendary for picking stocks that can weather every type of business cycle, and advocates being "greedy when others are fearful.” With plenty of uncertainty still on the horizon, let's take a look at a few Warren Buffett stocks worth buying on every dip.
Apple: The Tech Giant That Keeps on Innovating
Apple (AAPL) is one of the most valuable and influential companies in the world. It is known for its innovative products and services, such as the iPhone, iPad, Mac, Apple Music, iCloud, and more. With a staggering market capitalization of over $2.6 trillion, Apple currently holds the title of the world's largest company by this metric.
Apple’s stock performance has been impressive in 2023, despite some volatility and challenges. The stock has risen by 34% year-to-date, outperforming the S&P 500 Index ($SPX) by 24 percentage points. The stock reached an all-time high above $198 per share in July, but AAPL sold off after its most recent earnings report got a chilly reception on Wall Street.
The company not only provides dividends at a yield of 0.55% but also enhances shareholder value through share buybacks. In Q3 2023 alone, Apple distributed $3.8 billion in dividends and allocated approximately $18 billion to share buybacks.
Investors should note that AAPL is set to report earnings this Thursday, Nov. 2, with Wall Street looking for EPS of $1.39 per share alongside a fourth consecutive quarterly decline in earnings. Looking ahead, earnings are expected to surge to $6.54 per share in fiscal 2024.
Analysts remain optimistic about Apple's stock, with the consensus leaning towards a “moderate buy.” Out of 29 analysts tracking the stock, there are 17 “strong buy” recommendations, three “moderate buy” recommendations, and nine “holds.” The mean target price for the stock is $205.46, indicating 18% potential upside from current prices.
Coca-Cola: The Beverage Leader That's a Dividend King
Coca-Cola (KO), the global beverage giant, boasts an impressive lineup of over 500 brands and 4,300 products, spanning soft drinks, juices, water, sports drinks, energy drinks, tea, and coffee. This colossal company operates in 200+ countries, catering to a staggering 1.9 billion consumers daily.
In terms of stock price, Coca-Cola's shares are down 9% in 2023. That has left the company with a market value of around $244.2 billion.
Even with that hiccup in the stock price, Coca-Cola still shines as an attractive investment. They deliver a yield of 3.22%, backed by 60 consecutive years of increased dividend payouts - establishing the stock as a legit Dividend King. With a reasonable dividend payout ratio of 69%, Coca-Cola retains sufficient earnings to reinvest in its growth.
And Coca-Cola continues to beat the Street on earnings. Q3 EPS of $0.74 topped the consensus estimate of $0.69, while revenue of $11.91 billion surpassed expectations by a wide margin.
Among 14 analysts providing recommendations on KO, 11 call it a “strong buy,” one says “moderate buy,” and one suggests a “hold.” The mean target price for the stock sits at $65.50, indicating 16% upside potential from the current price.
Visa: The Payment Processor That Facilitates Global Commerce
Visa (V) s a global payment technology leader, connecting millions of consumers, businesses, financial institutions, and governments across 200+ countries and regions. It empowers swift, secure, and user-friendly electronic transactions, spanning various platforms like debit and credit cards, prepaid cards, mobile devices, and online services.
Notably, Visa's stock is up 15% YTD, outperforming the broader S&P 500. The shares also offer a dividend yield of 0.77%.
Financially, Visa demonstrates remarkable consistency in beating bottom-line estimates. The company in Q3 2023 reported a 27% year-over-year revenue increase, reaching $8.61 billion, and a 21% improvement in EPS to $2.33. Notably, Visa exceeded analysts' expectations in key metrics, including net income and payment volume.
Longer-term, analysts expect earnings to grow to $11.23 in fiscal 2025.
In the eyes of analysts, Visa's stock continues to shine. Out of 24 analysts, 18 rate it as a “strong buy,” four as a “moderate buy,” and two as a “hold.” The average target price for Visa's stock is $268.88 indicating 12.7% potential upside from the current price.
Conclusion
Without a doubt, Apple (AAPL), Coca-Cola (KO), and Visa (V) are top Warren Buffett stocks - but given their lengthy track records of solid performance and upbeat long-term forecasts, it's worth waiting for pullbacks to pick up shares of these names. So, on the next dip, consider adding these top-rated names to your portfolio.
On the date of publication, Ebube Jones did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
