The best Warren Buffett stocks to buy with $300 right now
Considering how the market is moving these days, it is not very difficult to find stocks priced below $300. Some of them are excellent buying opportunities, and others are value traps. Growth stocks needed to be tamed, and falling stock prices indicate investors are done with outrageous premiums.
Investors frequently turn to guru Warren Buffett in any economy, but in this type of market, his value-based philosophy seems particularly compelling. Amazon (AMZN -0.61%), Coca Cola (KO 0.18%)and Floor and decoration backgrounds (NDF 0.54%) are three great Buffett stocks to buy now with $300.
1. Amazon: 48% drop
Amazon only became a Warren Buffett stock in 2019. Some time before, Buffett said, “I had no idea it had the potential. I blew it.” And the opportunity is not over.
In many ways, Amazon has become the prototype for Buffett’s stock, as it bears many similarities to its holding company, Berkshire Hathaway (BRK.A 0.80%) (BRK.B 0.83%). He moved away from his core business, using his massive cash generation to fuel other revenue streams like cloud service provider Amazon Web Services (AWS), his biggest source of growth and profit today. .
One of the services that excites me the most is the development of its “just walk out” technology, a cashier-less checkout system that it has already implemented in many physical stores and which it also markets to other companies.
Despite its size and huge gains at the start of the pandemic, Amazon still posted 15% year-over-year sales growth in the third quarter. He predicts that will slow in the fourth quarter and the news disappointed investors, sending the stock plunging after the third quarter report.
But its core business remains healthy and its new activities offer many years of growth opportunities. Amazon stock was priced at $91 at the time of this writing, a price within reach for many investors while still offering significant upside potential.
2. Coca-Cola: +4%
Coca-Cola is Buffett’s longest running stock position, and not only is it beating the market, but it’s also one of a select group of stocks that have actually gained in value over the past year. This is a classic Buffett value play, with strong cash generation, a generous and growing dividend, new growth opportunities and a healthy valuation.
Despite inflation and rising costs across most industries, Coca-Cola posted further double-digit sales growth in the third quarter. Net revenue was up 10% over last year, with organic revenue (or existing product sales) up 16%. Operating profit rose 7% and, although margins came under slight pressure, the company still managed to increase earnings per share. Management has raised its revenue and earnings forecasts for the full year based on these results.
This is the strength of its brand and its well-oiled logistics systems. The beverage titan has turned to different packaging that could appeal to budget-conscious customers who still want the Coca-Cola flavor, successfully passing on some of its own increased costs in higher prices.
The company increased its dividend for the 60th consecutive year in 2022, keeping it in Dividend Kings’ exclusive company, and its payout earns 3% on the current share price. Investors can expect Coca-Cola to continue to effectively manage and grow its business and create shareholder value for many years to come.
3. Flooring and decoration: down 48%
Floor & Decor continues to show exceptional growth despite the economic gloom. In the third quarter, sales were up 25% year over year and earnings per share rose from $0.69 to $0.71, beating expectations. This is during a sour market where most retailers are struggling to post growth – and even harder to improve their profitability.
The company operates a niche retail model focused on all types of flooring, and its one-stop-shop approach, combined with great pricing, resonates with customers.
Floor & Decor is still relatively young and small, which leaves it plenty of room for growth. It opened four new stores in the third quarter and plans to open 13 more in the fourth quarter, bringing the total to 191 in 36 states. The retailer sees an opportunity to create 500 new stores over the next eight to ten years, which will put it in an excellent position to grow its sales. Lest investors think the growth is only in new stores, comps rose 12% in the third quarter.
Management lowered its full-year guidance after the third-quarter report, but investors were still impressed with the company’s performance and potential. Floor & Decor is now trading at its lowest price/earnings multiple since the crash of 2020, making it now a great entry point for new investors.
At the time of this writing, shares of Floor & Decor are trading at $69, and at this valuation, it looks like a great buy.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a board member of The Motley Fool. Jennifer Saibil has no position in the stocks mentioned. The Motley Fool holds positions and recommends Amazon and Berkshire Hathaway (B shares). The Motley Fool recommends the following options: $200 long calls in January 2023 on Berkshire Hathaway (B shares), $47.50 long calls in January 2024 on Coca-Cola, $200 short put options in January 2023 on Berkshire Hathaway (B shares) and January 2023 short calls at $265 on Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy.