Warren Buffett is well- known as one of the greatest investors of all time. The Berkshire Hathaway (NYSE:BRK-B) CEO has amassed an incredible fortune into his old age, acquiring a number of wholly-owned and partially-owned companies within his core holding vehicle (Berkshire).

This long-term strategy of buying excellent companies when they’re reasonably priced and selling when valuation multiples surge to levels that don’t make sense has served him well. It’s likely one of the key reasons he’s been selling stock, a lot of stock, in recent months. All indications are that these stock sales may continue moving forward, and to put it bluntly, some value investors are growing increasingly concerned on this news. That’s mostly because Buffett has a pretty good nose for when the market is overvalued or undervalued.

However, there are certain companies within Warren Buffett’s portfolio I think are worth looking at as buying opportunities. These are three stocks Buffett has recently bought or is reasonably likely to buy on serious downturns, and are ones I think make great long-term holdings for the average investor.

Key Points About This Article:

• Much ado has been made of Warren Buffett’s recent large sales of stock, but he’s actually been buying a few key names.
• Here are three stocks within the Buffett portfolio investors may want to consider as defensive value picks in these uncertain times.
• If you’re looking for some stocks with huge potential, make sure to grab a free copy of our brand-new “The Next NVIDIA” report. It features a software stock we’re confident has 10X potential.

Sirius XM (SIRI)

First on this list of stocks Buffett has been buying is Sirius XM (NASDAQ:SIRI), a satellite audio service provider that’s well known among the millions of Americans that use its service daily. Despite serving 33 million subscribers, Sirius XM recently lost 100,000 subscribers and continues to face stiff competition from the likes of Spotify, which has seen its subscriber growth surge by around 100 million over the past four years. Sirius XM continues to invest in exclusive content, agreeing to pay out around $125 million to specific content providers such as the top podcast Call Her Daddy, but questions are whether this will be enough to stem what’s otherwise been a grind lower in terms of total subscriber count over time.

Warren Buffett doesn’t appear to be worried, recently tripling his stake in Sirius XM amid these ongoing issues. SIRI stock did pop following this announcement, but has since continued lower, as more investors appear to side with the market’s consensus view that growth may be slower than expected.

For Warren Buffett, slow and steady is what wins the race. We’ll see if he’s right. One thing that’s for certain is this company has paid out a rather consistent dividend in the past, with SIRI stock currently yielding 4.3% after its recent dip. Additionally, the company maintained its 2024 guidance of $8.75 billion in revenue and $2.7 billion in EBITDA, which long-term stock owners will certainly like to see.

Now, the company did revise its free-cash-flow estimate down from $1.2 billion to $1 billion due to past outflows at Liberty Sirius XM Holdings. However, if Sirius XM can find a path forward to future growth and/or greater capital returns to shareholders, I wouldn’t be surprised to see Buffett continue buying on the way down. 

Coca-Cola (KO)

Coca-Cola (NYSE:KO) is among the best-known global brands out there, with a rather straightforward business model any investor can understand. A global leader in non-alcoholic beverages, Coca-Cola has expanded its product portfolio over the years, serving almost every country around the world.

The company’s strong long-term growth based on very sustainable consumption trends has allowed the company to become a dividend juggernaut, providing more than 50 consecutive years of dividend increases. With KO stock currently yielding 2.7%, there are certainly better options out there from an income perspective. However, the company’s multiple has remained relatively steady while Coca-Cola has increased its earnings at around 10% per year, suggesting excellent pricing power. I think this pricing power is going to become even more important moving forward, as inflationary pressures become more sticky than many think.

That’s not to say that there aren’t concerns from some investors, with the company’s North American sales volume declining in Q2. But in international markets, particularly Latin America and Asia Pacific, Coca-Cola showed solid growth. The company’s 15% year-over-year revenue increase largely came from price hikes, indicating strong brand demand even amid inflation.

Coca-Cola’s adjusted earnings rose 17% year-over-year, with 58% of this amount paid out as dividends. The company has increased its dividends annually for 62 years and remains poised to continue this streak. With strong brand power and a favorable industry outlook, Coca-Cola has been a mainstay in Buffett’s portfolio for over 30 years, and I expect the Oracle of Omaha to continue buying this stock on future dips. 

Charter Communications (CHTR)

In July, Charter Communications’ (NASDAQ:CHTR) shares surged after it reported better-than-expected second-quarter earnings. Despite losing 149,000 broadband subscribers, Charter’s revenue rose 0.2% to $13.7 billion, surpassing forecasts. The company added 557,000 mobile lines, boosting total to 8.8 million. Additionally, the company’s adjusted EBITDA climbed 2.6% to $5.7 billion, and earnings per share increased to $8.49. These results drove greater share buybacks, with the company’s management team pointing to successful execution of growth strategies and service improvements as key catalysts to watch.

Notably, Warren Buffett initially bought Charter Communications back in 2014, and sold off a significant chunk of his stake as the stock surged in 2021. With CHTR stock now trading at a much more reasonable valuation, this is one some experts have speculated could be a pick Warren Buffett adds to, particularly if economic indicators worsen and the stock falls further.

That’s mainly due to the company’s status as a very defensive company with a reasonable price-earnings multiple of around 10-times, in a market that’s filled with overvalued names. If the company is able to improve its customer acquisition through lower prices and improved services, there’s something to be said about potentially adding this name before Buffett does. 

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