One of Warren Buffett's most famous quotes is that investors should "be fearful when others are greedy and greedy only when others are fearful." That's good advice to remember these days.
A lot of investors are fearful, with stocks falling sharply in recent days. If you believe Buffett, though, this could present a tremendous buying opportunity. You can find great investing ideas simply by looking at Buffett's own Berkshire Hathaway portfolio. Here are three Buffett stocks to buy during the stock market sell-off without any hesitation.
1. Apple
Yes, Buffett recently sold a huge chunk of Berkshire's Apple (NASDAQ: AAPL) stake. He's obviously not being greedy with the stock right now, so why should other investors be?
Apple could be on the threshold of a multiyear iPhone upgrade supercycle. Many iPhone users are holding onto their older phones longer, which has hurt Apple's iPhone sales growth. However, Apple's revenue would surge if consumers were given a good reason to upgrade.
Such a reason appears to be at hand. Apple plans to soon roll out the initial Apple Intelligence functionality. This is the company's first generative AI launch -- and the features will only work on newer iPhones (the iPhone 15 Pro and later).
Apple's generative AI capabilities won't just boost iPhone sales -- they could also drive the company's services revenue higher (for example, in the App Store and other parts of the iPhone ecosystem). Some analysts predict that Apple could charge subscriptions for some Apple Intelligence features and give the company a new revenue source.
2. Chubb
Buffett began secretly buying shares of Chubb (NYSE: CB) last year. Berkshire now owns 6.4% of the property and casualty insurer, with a take worth close to $6.9 billion. I think Chubb is a great stock to buy during this stock market turmoil for three key reasons.
First, Chubb performs pretty well, even when the stock market is choppy. For example, its shares have slipped only 3% during the recent sell-off. That's largely a testament to the company's stable business.
Second, the stock is cheap in an overall market that's valued at a premium. Chubb's forward price-to-earnings ratio is only around 12.3, compared to the S&P 500's forward earnings multiple of nearly 22.2.
Third, don't be surprised if Buffett buys more Chubb -- and perhaps even the whole company. Chubb is a great fit with Berkshire's other insurance businesses.
The aforementioned sale of Apple stock gives Berkshire a massive cash stockpile it could use to fund an acquisition of Chubb and still have a lot of money left over. Even if Buffett doesn't opt to gobble up Chubb entirely, additional buying could make the stock attractive to other investors.
3. Lennar
Lennar (NYSE: LEN) is only a tiny holding for Buffett. Berkshire's stake in the homebuilder is worth around $23.6 million, which amounts to pocket change for the huge conglomerate. But Lennar is one of the best stocks in Buffett's portfolio to buy right now, in my view, because of something big on the way.
I'm referring to the increasing likelihood that the Federal Reserve will cut interest rates. The disappointing July numbers that served as one of the catalysts for the recent stock market sell-off make a rate cut even more likely.
As one of the largest homebuilders in the U.S., Lennar should be a key beneficiary if the Fed cuts rates. Granted, mortgage rates don't always fall in lockstep with short-term interest rates but usually move in tandem. A decline in mortgage rates would almost certainly lead to higher new home sales, which should help Lennar.
Whatever actions the Fed takes, the long-term thesis for buying Lennar is solid. The U.S. continues to face a housing shortage. More homes are needed -- and Lennar builds both single-family homes and multi-family rental properties.
Valuation is another big argument for buying Lennar stock. Its shares trade at only 10.6 times forward earnings.
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Keith Speights has positions in Apple, Berkshire Hathaway, and Chubb. The Motley Fool has positions in and recommends Apple, Berkshire Hathaway, and Lennar. The Motley Fool has a disclosure policy.
3 Warren Buffett Stocks to Buy During the Stock Market Sell-Off Without Any Hesitation was originally published by The Motley Fool