- In order to be like Warren Buffett and Berkshire, consider these stocks within its holdings.
- Apple (AAPL): Despite woes, there’s little reason to bet against Berkshire’s biggest position.
- Chevron (CVX): Rising earnings expectations provide a strong headwind for the oil giant.
- Occidental Petroleum (OXY): Plenty of upside left in OXY stock even after record profits.
- General Motors (GM): Berkshire is constant on GM and its battery tech.
- Coca-Cola (KO): To be like Berkshire you have to allow yourself to be boring.
- Amazon (AMZN): Buy the battered tech giant while the opportunity is ripe.
- Citigroup (C): Buy into Berkshire’s newest acquisition.
It’s relatively easy to be like Warren Buffett from one point of view: You can invest in a mix of stocks that exactly mirrors the holdings of his Berkshire Hathaway (NYSE:BRK.A, BRK.B) firm by simply investing in its stock. That won’t put you anywhere near his net worth of $112 billion. But it will at least put you on track for steady returns backed by the strength of American business.
And that’s the point of Berkshire Hathaway. But where should investors place their capital within that portfolio of stocks under Berkshire Hathaway? After all, there are roughly 50 positions within Berkshire Hathaway stock. Which positions within its holdings represent the potential for exceptional growth?
Let’s look at those that stand out as likely candidates.
|OXY||Occidental Petroleum Corporation||$65.85|
|GM||General Motors Company||$35.76|
|KO||The Coca-Cola Company||$64.07|
Warren Buffett Stocks to Buy: Apple (AAPL)
Warren Buffett’s track record speaks for itself. His prudent investment style has amassed him a fortune that has made him the world’s richest person at several points. And the good news is that Berkshire’s biggest holding is arguably trading at a discount currently.
The other good news is that Berkshire isn’t wavering in its belief in Apple (NASDAQ:AAPL) stock. In Q4 of 2021 Berkshire Hathaway controlled more than 887 million shares of Apple stock. In Q1 2022 it has not wavered in its belief in the firm. In fact, it has upped its position to nearly 891 million shares of Apple. That’s as strong an indication that the tech wreck is a buying opportunity as there is in my opinion.
Wedbush analyst Daniel Ives sees the current environment as a “generational buying opportunity” for the right names in tech, among which Apple is included. Ives believes that any recession is already factored into current prices and that Apple’s innovation will see it rise inevitably. It’s a fair bet.
It makes a lot of sense to get on board with Berkshire Hathaway’s recent moves in Chevron (NYSE:CVX) stock. In Q4 Berkshire Hathaway controlled 38.425 million shares of CVX stock. That position ballooned by 120.93 shares, to above 159 million in total.
That might lead investors to believe that any returns in Chevron have already been had. But the stock trades below both the analyst average and median stock price currently. That indicates that current political events remain as positive catalysts moving forward.
If Berkshire Hathaway’s confidence in Chevron isn’t enough to sway you, then perhaps Goldman Sachs’ (NYSE:GS) opinion can tip the balance. The investment bank named Chevron among its so-called “margin of safety” stocks that play well despite the overall volatile macroeconomic environment.
The other news of note is that Chevron’s Q2 EPS estimates continue to rise. Those estimates sat at $4.43 a month ago and have increased to $4.47 at present.
Warren Buffett Stocks to Buy: Occidental Petroleum (OXY)
Occidental Petroleum’s (NYSE:OXY) first-quarter profits reached a record $4.7 billion. Those record profits were the result of a 65% increase in realized oil prices and came even as the company saw production decrease.
Buffett’s Berkshire Hathaway firm initiated its position in OXY stock in the first quarter and increased that holding from 136 million shares to 220 million shares as of April 30.
As long as the Russian invasion of Ukraine continues, OXY stock will remain particularly strong. The company relies on its holdings in the Permian Basin of Texas and New Mexico to produce the majority of its oil. And 80% of the oil the company produces comes from the U.S. overall.
With prices at the pump rising drastically over the last month and the last week, it would seem that Occidental Petroleum will see another strong quarter. Its strong position domestically, coupled with rising prices, nearly ensures that will happen.
General Motors (GM)
Ostensibly part of the reason that Berkshire Hathaway invests in General Motors (NYSE:GM) is its deep value and the upside in its EV battery tech.
The company carries a low P/E ratio that is currently near a two-year low. Part of the reason GM doesn’t attract greater amounts of investor capital that would increase its price is the staid nature of its internal combustion automobile business. The future is electric and that’s where investor capital is headed.
GM’s electrification efforts are underpinned by its Ultium EV battery platform. It is beginning to deliver EVs built around that platform. That evolving sales mix has investors interested. Part of the reason they’re interested is that the chemistry of those batteries relies on 70% less cobalt than competing tech. Cobalt is difficult to source and the relatively reduced reliance on it could help to push costs below $100 per kilowatt-hour.
That figure represents an important threshold at which EVs become cost-competitive with internal combustion vehicles.
Warren Buffett Stocks to Buy: Coca-Cola (KO)
Part of investing like Berkshire Hathaway and Warren Buffett is simply choosing to be boring. Coca-Cola (NYSE:KO) stock is among Buffett’s more conspicuous picks: He often features its products publicly during his meetings. But it’s essentially a conservative pick that has stood the test of time.
Coca-Cola stock should give investors slow growth backed by a reliable dividend policy. That dividend hasn’t been reduced since 1963 in fact. And current investors should expect the quarterly dividend to increase by 1 to 2 cents annually. That’s pretty boring to some, but to a prudent investor it’s perfect.
So, be boring. KO stock is a near guarantee to bring predictable growth to its holders. The company should record somewhere in the neighborhood of $42 billion in revenues this year and $44 billion next. Slow and steady just like Berkshire.
It’s clear that Berkshire Hathaway values Amazon (NASDAQ:AMZN) far less than it does the other tech giant, Apple. The holdings company has roughly 100X the capital invested into the latter relative to the former. That said, the firm currently maintains a position in AMZN stock valued at $1.74 billion.
Be like Berkshire and establish a position prior to its upcoming stock split. That proposed split will be voted on May 25 and will initiate a 20-for-1 change in ownership. With Amazon severely beaten down in the tech wreck, there’s massive upside already currently priced into its shares. Although the 20-for-1 split affects nothing fundamentally, its psychological value could drive prices dramatically upward.
A current holder of a single AMZN share could soon have 20 shares that trade near $105. At those prices, AMZN stock might be able to appreciate in price more easily with lesser resistance.
Warren Buffett Stocks to Buy: Citigroup (C)
Warren Buffett’s Berkshire Hathaway holding company very recently initiated a position in Citigroup (NYSE:C) stock. His firm acquired 55.16 million shares of C stock and now controls a 2.8% stake in the financial firm.
Citigroup carries a very low trailing P/E ratio of 7.37, which signifies the value that Berkshire and Buffett often seek to identify in given positions. The news of the newly established position sent C stock shares up more than 7%. But plenty of upside remains. C stock carries an average target price above $65 and currently trades around $52.
Another reason to be positive on C stock aside from Berkshire’s blessing is the firm’s performance over the past year: In each of the last four quarters, it has provided earnings beats. Most recently it posted a $2.02 EPS, far outpacing the $1.46 Wall Street was expecting.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.