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Welcome to Episode #357 of the Value Investor Podcast.
Every week, Tracey Ryniec, the editor of Zacks Value Investor portfolio, shares some of her top value investing tips and stock picks.
Growth stocks are breaking out again in 2024, especially technology companies involved in AI and big pharmaceuticals which are making weight loss drugs.
But while many are arguing that it is ONLY big tech that is hitting multiple new highs, there are others outside of tech doing it too including Chipotle, Deckers and the ultimate in old economy companies, Warren Buffett’s Berkshire Hathaway.
Berkshire Hathaway at New Highs
Berkshire Hathaway (BRK.B - Free Report) has a big position in Apple. It’s over 50% of the company’s equity portfolio. But that doesn’t make it a technology company.
Most of Berkshire Hathaway’s actual company holdings are old economy type companies like Geico Insurance, See’s Candies, and BNSF Railway, one of the largest railroads in the United States.
Yet, it’s making new all-time highs. Shares of Berkshire Hathaway are up 11.5% year-to-date and have gained 29% over the last year, which is easily beating the S&P 500, Buffett’s benchmark, up just 22%.
Shares are not cheap though. Berkshire Hathaway trades with a forward P/E of 21.7 but it does have a P/B ratio of just 1.6. A P/B ratio under 3.0 usually indicates value.
What is a record high in Berkshire Hathaway saying about the rest of the stock market?
Chevron is a large energy company with a market cap of $280 billion. It’s currently a Zacks Rank #5 (Strong Sell) as earnings estimates are being cut on lower oil prices. Earnings of Chevron are expected to fall 0.8% in 2024.
Chevron shares are down 9.4% over the last year. It’s cheap with a forward P/E of 11.7. Chevron pays a dividend, currently yielding 4%. Chevron is also a top 5 holding in Berkshire Hathaway’s equity portfolio.
Should investors be considering Chevron for an old economy portfolio?
Berkshire Hathaway continues to buy more shares of Occidental Petroleum in 2024 as the shares have sunk. Occidental Petroleum, a large energy producer, is down 9.2% over the last year.
Shares of Occidental Petroleum have gotten cheaper. It is trading with a forward P/E of 13.2. Occidental Petroleum pays a dividend, yielding 1.5%.
Should investors be buying Occidental Petroleum because Berkshire is?
Union Pacific is one of the largest railroads in the United States. Shares of Union Pacific are hitting new 52-week highs in 2024, up 20.2% over the last year.
It’s not cheap. Union Pacific trades with a forward P/E of 22.8. Earnings are expected to grow 4.9% in 2024 and another 11% in 2025.
Should a railroad like Union Pacific be on your short list?
Fastenal is in two old economy industries: manufacturing and construction. But shares of Fastenal are up 31.5% over the last year, easily beating the S&P 500 return of 22.1%. It’s also been making new all-time highs in 2024.
Fastenal is pricey on a P/E basis, however. It trades with a forward P/E of 32.4. Earnings are expected to rise 6.4% in 2024.
Is Fastenal too hot to handle in 2024?
What Else Do You Need to Know About Old Economy Stocks?
Tune into this week’s podcast to find out.
[In full disclosure, Tracey owns shares of CVX in her own personal portfolio.]
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Berkshire Hathaway Stock Hits New Highs: What Does it Mean?
Welcome to Episode #357 of the Value Investor Podcast.
Every week, Tracey Ryniec, the editor of Zacks Value Investor portfolio, shares some of her top value investing tips and stock picks.
Growth stocks are breaking out again in 2024, especially technology companies involved in AI and big pharmaceuticals which are making weight loss drugs.
But while many are arguing that it is ONLY big tech that is hitting multiple new highs, there are others outside of tech doing it too including Chipotle, Deckers and the ultimate in old economy companies, Warren Buffett’s Berkshire Hathaway.
Berkshire Hathaway at New Highs
Berkshire Hathaway (BRK.B - Free Report) has a big position in Apple. It’s over 50% of the company’s equity portfolio. But that doesn’t make it a technology company.
Most of Berkshire Hathaway’s actual company holdings are old economy type companies like Geico Insurance, See’s Candies, and BNSF Railway, one of the largest railroads in the United States.
Yet, it’s making new all-time highs. Shares of Berkshire Hathaway are up 11.5% year-to-date and have gained 29% over the last year, which is easily beating the S&P 500, Buffett’s benchmark, up just 22%.
Shares are not cheap though. Berkshire Hathaway trades with a forward P/E of 21.7 but it does have a P/B ratio of just 1.6. A P/B ratio under 3.0 usually indicates value.
What is a record high in Berkshire Hathaway saying about the rest of the stock market?
The old economy isn’t dead yet.
4 Old Economy Stocks for 2024
1. Chevron Corp. (CVX - Free Report)
Chevron is a large energy company with a market cap of $280 billion. It’s currently a Zacks Rank #5 (Strong Sell) as earnings estimates are being cut on lower oil prices. Earnings of Chevron are expected to fall 0.8% in 2024.
Chevron shares are down 9.4% over the last year. It’s cheap with a forward P/E of 11.7. Chevron pays a dividend, currently yielding 4%. Chevron is also a top 5 holding in Berkshire Hathaway’s equity portfolio.
Should investors be considering Chevron for an old economy portfolio?
2. Occidental Petroleum (OXY - Free Report)
Berkshire Hathaway continues to buy more shares of Occidental Petroleum in 2024 as the shares have sunk. Occidental Petroleum, a large energy producer, is down 9.2% over the last year.
Shares of Occidental Petroleum have gotten cheaper. It is trading with a forward P/E of 13.2. Occidental Petroleum pays a dividend, yielding 1.5%.
Should investors be buying Occidental Petroleum because Berkshire is?
3. Union Pacific Corp. (UNP - Free Report)
Union Pacific is one of the largest railroads in the United States. Shares of Union Pacific are hitting new 52-week highs in 2024, up 20.2% over the last year.
It’s not cheap. Union Pacific trades with a forward P/E of 22.8. Earnings are expected to grow 4.9% in 2024 and another 11% in 2025.
Should a railroad like Union Pacific be on your short list?
4. Fastenal Co. (FAST - Free Report)
Fastenal is in two old economy industries: manufacturing and construction. But shares of Fastenal are up 31.5% over the last year, easily beating the S&P 500 return of 22.1%. It’s also been making new all-time highs in 2024.
Fastenal is pricey on a P/E basis, however. It trades with a forward P/E of 32.4. Earnings are expected to rise 6.4% in 2024.
Is Fastenal too hot to handle in 2024?
What Else Do You Need to Know About Old Economy Stocks?
Tune into this week’s podcast to find out.
[In full disclosure, Tracey owns shares of CVX in her own personal portfolio.]