Warren Buffett did it again in 2022. He beat the market.
Sure, Berkshire Hathaway's (BRK.A -0.34%) (BRK.B -0.01%) gain of 3% on the year wasn't spectacular. However, many investors would have been happy with that return during a year when the S&P 500 sank by nearly 20%.
Several stocks in Berkshire's portfolio performed especially well in 2022. Which ones will be the biggest winners in the new year? Here are my picks for the three best Buffett stocks to buy for 2023.
1. Occidental Petroleum
Buffett bought shares of 19 companies last year, including Berkshire Hathaway's stock buybacks. None of them delivered a greater return than Occidental Petroleum (OXY 0.58%). Shares of the oil and natural gas producer skyrocketed by 117%.
I think that Occidental just might repeat as Buffett's biggest winner in 2023. Several Wall Street analysts believe that another bull market for oil will come this year. That outlook is due to expectations that demand will recover while supply remains constrained.
If the analysts are right, Occidental should again generate impressive returns. Even after its huge gains over the last 12 months, the stock trades at only 8.4 times expected earnings.
Oxy could also have an automatic catalyst that drives its share price higher regardless of what happens with oil prices. Berkshire Hathaway currently owns 21.4% of the energy company, but it secured regulatory approval last year to acquire up to 50%. If Buffett keeps aggressively buying the stock (and I suspect that he will), look for it to have another banner year.
2. Chevron
Buffett has another favorite oil stock: Chevron (CVX 0.57%) ranks as the third-largest holding in Berkshire's portfolio. And he added to this position throughout 2022.
Investing so heavily in Chevron has paid off nicely. Shares of the oil and natural gas giant soared more than 50% last year. Its solid dividend boosted Buffett's total return even more.
In 2022, Chevron was a member of the Dogs of the Dow -- the 10 highest-yielding stocks in the Dow Jones Industrial Average. Buying these stocks has been a surprisingly effective strategy through the years. And Chevron returns as one of the Dogs of the Dow in 2023.
But that's not why I think Chevron is one of the best Buffett stocks to buy for this year. Instead, I predict that the dynamics for the oil industry that should help Occidental in 2023 will serve as tailwinds for Chevron, too.
3. Amazon
Buffett hasn't been buying Amazon (AMZN 1.30%) stock hand over fist recently -- but that has worked out well for the legendary investor. Amazon stock plunged by nearly 50% in 2022.
However, I think that Amazon could bounce back in 2023. There are two main reasons behind the company's sluggish growth (and dismal stock performance) of late -- macroeconomic worries impacting customers and Amazon's own high levels of spending. Both headwinds should be temporary.
Amazon is taking the bull by the horns in addressing the spending issue. The company is cutting costs in several ways. Macroeconomic factors, though, are beyond Amazon's control. It's possible that a recession could negatively impact its business this year.
Still, don't count out the possibility that the stock market could enter a new bull market later in 2023. If that happens, Amazon should be a surefire winner. Its shares are cheaper than they've been in years (and more attractively valued than ever before based on price-to-projected free cash flow.)
