8 Best Warren Buffett Stocks to Buy According to Analysts

3. Chevron Corporation (NYSE:CVX)

Warren Buffett’s Q2 2024 Stake: $18.55 Billion

Analyst Upside Potential, as of September 26: 23%

Number of Hedge Fund Holders: 64

Chevron Corporation (NYSE:CVX) is one of Buffett’s investment plays for exposure in the energy sector. While the company has felt the full brunt of oil prices plunging from above the $80 barrel level, it remains one of the companies well poised to navigate the challenging environment.

Chevron Corporation (NYSE:CVX) operates as an integrated energy firm throughout the industry, meaning it is involved in all aspects of the energy sector. This includes involvement in oil and natural gas exploration and production (upstream), the transportation of energy (midstream), and the processing of chemicals and refining (downstream). At any given moment, each of these areas of the industry can show varying levels of performance.

The company’s competitive edge stems from having a balance sheet capable of weathering down any energy industry cycle while continuing to reward investors with dividends. Additionally, the company boasts of one of the lowest debt-to-equity ratios of 0.15 as it pays more attention to its balance sheet.

Chevron Corporation (NYSE:CVX) can increase its financial strength when the oil price falls, enabling the company to keep investing in its operations and distributing dividends. It’s worth noting that the dividend has risen for an impressive 37 years straight, marking an extraordinary achievement considering Chevron’s competitive industry.

As oil prices rise again, as they invariably do, Chevron Corporation (NYSE:CVX) decreases its financial exposure to prepare for the next economic slump. For conservative investors seeking a reliable energy stock that can weather any storm, finding a more attractive alternative than Chevron’s 4.5% dividend yield would be challenging. The stock commands an average buy rating on Wall Street with a $177.08 price target, implying 23% upside potential.

In the second quarter of 2024, 64 hedge funds held positions in the stock, with total stakes reaching $22.41 billion. By June 30, Berkshire Hathaway was the largest shareholder, holding a position valued at $18.55 billion.

In its fourth quarter 2023 investor letter, Diamond Hill Capital’s Diamond Hill Large Cap Strategy commented on Chevron Corporation (NYSE:CVX):

“Other bottom contributors included Chevron Corporation (NYSE:CVX), Carrier Global and Becton, Dickinson. Shares of integrated oil and gas company Chevron were pressured as global oil production is growing — particularly in the US, which has now surpassed its past production levels — in turn pressuring oil prices and company profit margins.”