Opinion: This Is Hands-Down the Best Warren Buffett Stock to Own During a Market Correction

Are we in a stock market correction or not? The answer seems to change every few days, at least if we're talking about the S&P 500. However, regardless of how much the market is down on any given day, investors remain nervous.

I wouldn't be surprised if market turbulence and uncertainty prevail for a while. I also suspect the S&P 500 could be in correction territory more than investors would like.

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Does that mean you should avoid stocks altogether? Warren Buffett, who knows a thing or two about investing, isn't. I think some of the stocks in his portfolio could be good picks because of the uncertainty. And one especially stands out in my opinion as the hands-down best Buffett stock to own during a market correction.

Worthy contenders

Before I get to the Buffett stock I think is the best choice for a scary market environment, let's look at several worthy contenders that didn't quite make the cut. I'd put food and beverage giant The Coca-Cola Company (NYSE: KO) near the top of the list.

Coca-Cola has been, and continues to be, one of Buffett's favorite stocks. He's owned it longer than any other stock in Berkshire Hathaway's (NYSE: BRK.A) (NYSE: BRK.B) portfolio. Consumer staples stocks tend to perform quite well during market downturns. Coke serves as a great example, with its shares jumping 13% year to date while the S&P 500 sank.

Speaking of consumer staples stocks, Kroger (NYSE: KR) is trouncing the market these days as well. This grocery chain leader recently hit an all-time high. Consumers will buy groceries regardless of what happens with the stock market or the economy. I think Kroger's share price is likely to hold up better than most if the S&P 500 continues to flounder.

Some investors turn to well-known, high-quality dividend stocks when the overall market is turbulent. Buffett owns several that fit the bill in addition to Coca-Cola, including Chevron (NYSE: CVX). Shares of the huge oil and gas company have risen roughly 15% year to date. Chevron is strong financially. It pays an attractive forward dividend yield of 4.12%. The company has also increased its dividend for 38 consecutive years.

Simply the best

I don't think you'd go wrong investing in Coca-Cola, Kroger, or Chevron if the market stays in a sustained correction. However, another Buffett stock is simply the best to own in such an environment in my view: Berkshire Hathaway itself.

It's not shocking to me in the least that Berkshire has outperformed Coca-Cola, Kroger, and Chevron so far this year. I fully expect the conglomerate to end 2025 as one of the best mega-cap S&P 500 stocks. Why is Berkshire my hands-down pick as the best to own during a market correction? I have three main reasons.

First, Berkshire's core business is rock-solid. There is no doubt whatsoever that the company will successfully navigate whatever comes its way. Buffett wrote to shareholders in 2024, "I believe Berkshire can handle financial disasters of a magnitude beyond any heretofore experienced." I believe that too -- and, more importantly, so do many other investors.

Second, Berkshire offers tremendous diversification. When you buy the stock, you're not putting all of your eggs into one basket. Investing in Berkshire Hathaway is almost like investing in an exchange-traded fund (ETF). The conglomerate has over 60 subsidiaries spanning a wide range of industries. It owns stakes in over 40 other publicly traded companies (including Coca-Cola, Kroger, and Chevron, of course).

Third, Buffett has built a massive cash stockpile for Berkshire. At the end of 2024, the company's cash, cash equivalents, and short-term investments in U.S. Treasury bills totaled $334.2 billion. If stock valuations become more attractive, you can bet Buffett and his team will put some of that money to good use.

The one potential gotcha with Berkshire Hathaway

I do have one reservation about Berkshire Hathaway, though. The stock's valuation is higher than I'd prefer with its forward price-to-earnings ratio above 26.

Buffett doesn't seem to like this valuation, either, considering he didn't approve any stock buybacks in the fourth quarter of 2024. That's atypical for the legendary investor. Berkshire repurchased shares every quarter over the last five years until last quarter.

However, the pluses that Berkshire offers make it attractive enough to justify a premium. I think that's especially the case when the overall market is flailing.

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Keith Speights has positions in Berkshire Hathaway and Chevron. The Motley Fool has positions in and recommends Berkshire Hathaway and Chevron. The Motley Fool recommends Kroger. The Motley Fool has a disclosure policy.