Stocks to buy

Warren Buffett stocks are on the rise, and many think that the Oracle of Omaha is back. After weathering a stormy market and making some eyebrow-raising moves, including panic selling his 10% stake in Delta (NYSE:DAL), United (NASDAQ:UAL), American (NASDAQ:AAL) and Southwest (NYSE:LUV), his mammoth conglomerate Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B) is up nearly 7% since January. But still, as we roll into June, some top Warren Buffett stocks remain on sale for investors ready to heed the Oracle.

Remember that Buffett’s stock picks are a masterclass in value investing strategies, which are all about spotting stocks that are on sale or undervalued. Value investing analytics range widely, but two of the best indicators are price-to-earnings (P/E) and price-to-book (P/B) ratios.

The P/E ratio, calculated by dividing a company’s market price per share by its earnings per share, provides a measure of the price investors are willing to pay for every dollar of a company’s earnings. If a company’s P/E ratio is lower than its industry peers, it might be a sign that it’s undervalued, which basically means investors can buy its earnings on the cheap.

Likewise, the P/B ratio, determined by dividing a company’s stock price by its book value per share, gives an indication of whether the market price accurately reflects the company’s net asset value. If the P/B ratio is on the low side, some read the indicator as suggesting that its intrinsic value (based on its assets) is higher than what the market’s currently pricing it at.

Occidental Petroleum (OXY)

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After consistently buying the dip throughout the year, Buffett now holds a considerable 222 million shares of Occidental Petroleum (NYSE:OXY). This $13 billion investment equates to a nearly 25% stake in the company. This clearly indicates Buffett’s robust confidence in OXY despite ongoing oil industry challenges.

Operationally, OXY’s production exceeded expectations by 2% in the recent quarter, and the company maintained its spending below the $6 billion mark, contributing to an impressive trailing-12-month net margin of 24.58%, hugely outperforming the industry average of 16.3%.

Alongside these stats, OXY achieved a return on invested capital of 22.34%. This is superior to the industry standard of 17.63%, making it a perfect addition to a portfolio of Warren Buffett stocks.

Chevron (CVX)

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Buffett is bullish on the oil industry, as we saw with OXY. His Chevron (NYSE:CVX) stake reinforces his thesis.

The stock made a splash with its first-quarter earnings report, profiting $6.7 billion. This outperformed market predictions while also trumping last year’s $6.5 billion.

The quarter also saw Chevron shelling out $2.9 billion (roughly 4%) in dividends and buying back $3.75B worth of shares. That equates to a hefty 31% payout ratio for hungry investors. Second-quarter plans include a $4.375 billion buyback, a move that’s a part of its recently declared $75 billion grand strategy.

The company also aggressively addressed its debt thus far in 2023, with net debt dipping quarter-over-quarter. It came in at 3.3%, which indicates the firm is well-positioned for further rate hikes and economic uncertainty.

General Motors (GM)

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General Motors (NYSE:GM) is the perfect value play for those wanting a piece of the electric vehicle (EV) industry. As the second-largest producer of EVs in the U.S., GM is charging ahead with additional offerings. In 2023, these offerings will include the Silverado EV, the Blazer EV and the Equinox EV later in the year.

Predicting $225 billion in total revenue by 2025, GM is banking on at least $50 billion to come from its EV offerings. GM will likely be a major global EV player in just a few years. It is betting on economies of scale alongside plummeting battery costs to steer its EV profitability.

Aside from its aspirations, GM’s balance sheet is solid. Its $28.2 billion in cash and dwindling debt provides the financial bedrock needed to run day-to-day operations and plan for growth.

GM ticks all the right boxes for a quintessential value pick. It’s a dominant force in a concentrated industry, ripe with growth opportunities and an enticing valuation.

On the date of publication, Jeremy Flint held a long position in OXY. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Jeremy Flint, an MBA graduate and skilled finance writer, excels in content strategy for wealth managers and investment funds. Passionate about simplifying complex market concepts, he focuses on fixed-income investing, alternative investments, economic analysis, and the oil, gas, and utilities sectors. Jeremy’s work can also be found at www.jeremyflint.work.

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