3 Warren Buffett stocks to buy in a bear market

Share prices have been coming down recently amid fears of stagflation and political uncertainty. Amid the declines, our writer’s buying these three stocks.

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According to Warren Buffett, it’s a good thing when share prices come down. Lower prices, according to Buffett, mean better opportunities to buy more shares in businesses. 

High inflation, rising interest rates, and an uncertain political climate are driving down share prices across the board and fuelling a bear market. With that in mind, here are three stocks that I think fit Warren Buffett’s parameters. I’m buying them as share prices come down.

Amazon

First on my list is e-commerce giant Amazon (NASDAQ:AMZN). The Amazon share price has come down by over 30% since the beginning of the year and I’m using the drop to add to my investment in the company.

Amazon’s declining share price isn’t just the result of general market movements. The company’s most recent earnings report was disappointing – the company announced a loss of $7.56 per share and its stock fell in response.

While I agree that Amazon’s performance in the last quarter was disappointing, I think the market’s response is an overreaction to the company announcing a reduction in the value of its investment in Rivian Automotive. As a result, I see this as a really attractive opportunity to add shares in Amazon to my portfolio. 

StoneCo

I’ve also been buying shares in StoneCo (NASDAQ:STNE) recently. The Brazilian fintech’s stock has also been struggling recently and its shares now trade under $10. Considering Berkshire Hathaway was buying shares at around $31 when the company first became public, I think that the current share price is quite attractive.

Like Amazon, the decline in StoneCo shares isn’t just due to factors affecting the market overall. Higher inflation in Brazil, an over-ambitious investment in Banco Inter, and complications with the company’s loan business have caused the stock to fall over 85% in the last year.

I think that a good amount of the StoneCo’s struggles will subside over time, though. The company’s balance sheet looks strong to me and while I see the risks associated with the stock, I’m happy buying the shares at a greatly depressed price.

Verizon

The last stock that I’m buying at the moment is Verizon Communications (NYSE:VZ). The stock is currently trading on a low price-to-earnings (P/E) multiple of around 9, but I don’t think this tells the full story. 

As a business, Verizon has around $147bn in debt that poses a risk to consider from an investment perspective. That needs to be paid off before returns to shareholders. 

Despite this, I think that the business is attractively priced. Even accounting for the company’s debt, I think that as a Verizon shareholder, I can realistically hope for a return of around 8.56%.

As it is a 5G infrastructure company, I expect demand for Verizon’s services to remain fairly steady for the foreseeable future. Given this, I’m very happy buying shares at the current $48 price.

Summary

Amazon and StoneCo are both companies expecting substantial growth over time. Verizon is more of a solid and steady operation. In the current bear market, I’m happy buying all three.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Stephen Wright has positions in Amazon, Berkshire Hathaway (B shares), Stoneco LTD, and Verizon Communications. The Motley Fool UK has recommended Amazon. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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