3 Warren Buffett Stocks Down 20% to Consider for Long-Term Investment

Warren Buffett, often celebrated for his investment prowess, regularly sees numerous successes in his extensive Berkshire Hathaway portfolio, particularly when the stock market experiences an overall uptick. However, not every stock matches the market's high-flying performance. In fact, some of the holdings in Berkshire Hathaway have seen significant drops in price.

This downward movement doesn't typically concern Buffett, as he views these dips as prime opportunities to acquire more shares of solid companies at a lower cost. Currently, there are three particular stocks within Buffett's portfolio that have fallen by 20% or more, presenting attractive buy-and-hold options.

1. Bank of America

Bank of America (BAC), a heavyweight in Berkshire Hathaway's lineup, has experienced a substantial drop, over 30%, from its peak in early 2022. Market downturns throughout that year and struggles within the banking sector contributed to this decline.

Even so, Bank of America remains a top asset for Berkshire, prompting Buffett to increase his stake in the bank at these reduced prices early in 2023. The value of this investment is now around $34.4 billion. Investors currently see heightened appeal in BofA due to its more attractive valuation at a forward earnings multiple of just 10.3x and a dividend yield standing strong at nearly 2.9%.

Bank of America's reputation as a leading bank is well-established, having been recognized with several prestigious awards that confirm its excellence and innovation in banking.

2. Chevron

Chevron (CVX) has seen a drop of just over 20% from its 2023 commencement levels. While less favorable oil prices and market reaction to its plans to acquire Hess had an impact, it also provided a more enticing entry point for investors. Berkshire first capitalized on Chevron during the 2020 oil slump and has maintained a significant, although slightly reduced, stake in the company.

Chevron's position in Berkshire's portfolio remains solid, and the drop in stock price has resulted in a more inviting valuation and dividend yield, now nearly 4.1%. With a continued demand for oil and gas, and Chevron's ventures into renewable energy and other fields, it still promises long-term growth potential.

3. Occidental Petroleum

Occidental Petroleum (OXY) also faced a slump, sinking over 20% from its highs. Buffett, ever the opportunist, responded by increasing Berkshire's holdings of Occidental in 2023, with the conglomerate now owning 27.8% of the company.

With the prospect of increasing their stake further, boosted by regulatory approval to go up to 50%, Berkshire's view on Occidental is evidently positive. An attractive forward earnings multiple and Occidental's leading investment in carbon capture technology elevate its long-term attractiveness, potentially positioning it as a formidable force in a future market worth trillions.

Buffett, Stocks, Investment