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2 Beloved Warren Buffett Stocks to Watch on Rise in Oil Prices
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Warren Buffett is unquestionably the paragon of well-reasoned investing. He entered the investing game quite early and accomplished tremendous success by placing bets on companies having competitive advantages.
Buffett believes in acquiring and holding companies that have a promising business model, generate income unswervingly, and provide dividends, indicating sustainable growth. Companies that generate plenty of cash also fall under the ambit of the Oracle of Omaha’s investment viewpoint.
It is, thus, worth mentioning that Warren Buffett-led Berkshire Hathaway Inc (BRK.B - Free Report) has been loading up on oil companies in recent times. However, most market participants are consumed by AI optimism, betting big on semiconductors like NVIDIA Corporation (NVDA - Free Report) (read more: Nvidia a Must-Buy After AI-Fueled Blowout Earnings).
Warren Buffett’s inclination toward energy players is due to an uptick in oil prices for quite a while. Brent crude is approaching the $90 a barrel mark, which is a significant high, while the West Texas Intermediate (WTI) crude is advancing the $86 a barrel mark, the highest level in five months.
Bank of America Corporation’s (BAC - Free Report) analysts also have raised their crude oil forecast for this year. Oil prices are gaining traction amid prospects of higher demand and supply shortages owing to the geopolitical crisis.
The American Petroleum Institute recently reported that there has been a drop in U.S. inventories, with crude oil shedding 2.3 million barrels. At the same time, expansion in manufacturing activity in China for the first time in six months in March indicates growing demand for oil soon.
On the other hand, a Ukrainian drone strike on a Russian refinery and Israel’s strike on Iran’s embassy in Syria are all set to disrupt the supply of oil.
Thus, with oil prices advancing after taking a beating at the end of 2023, it’s prudent for investors to keep an eye on Warren Buffett’s favorite, Occidental Petroleum Corporation (OXY - Free Report) and Chevron Corporation (CVX - Free Report) .
During the first week of February, Warren Buffett spent a whopping $245.7 million on purchasing shares of Occidental Petroleum. The company has become one of Berkshire Hathaway’s top public equity holdings.
Occidental Petroleum has come a long way from going bankrupt in 2020 to being one of the most sought-after oil companies this year. Production from Permian resources stood in good stead for Occidental Petroleum. Its operation in the Permian Basin is expected to expand, banking on the company’s acquisition of CrownRock L.P.
Occidental Petroleum’s sale of non-core assets helped trim its outstanding debt. Occidental Petroleum has kept operational expenses under check and generated considerable income from sales since its net profit margin is 16.2%, more than 10%, signifying a healthy margin.
Occidental Petroleum has solid fundamentals since it has paid constant dividends to its shareholders. In the past 5-year period, OXY has increased its dividend four times, and its payout has advanced 0.8%. Occidental Petroleum has a dividend yield of 1.31%. Check Occidental Petroleum’s dividend history here.
The Zacks Consensus Estimate for its next-year earnings has increased by 1.9% over the past 30 days. OXY’s expected earnings growth rate for the next year is 34.4%. The company currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.
Chevron also occupies a top spot in Berkshire Hathaway’s equity holdings. Chevron’s leading position in the money-spinning Permian Basin is providing the company with maintainable production growth. The company’s present acquisition of Hess Corporation is expected to help it sustain earnings growth and cash inflows.
Chevon has an encouraging net profit margin of 10.6%. In the past 5-year period, CVX has increased its dividend five times, and its payout has advanced 6.1%. Chevron has a dividend yield of 4.08%. Check Chevron’s dividend history here.
The Zacks Consensus Estimate for its current-year earnings has increased by 2% over the past 30 days. CVX’s expected earnings growth rate for the next year is 18.7%. The company currently has a Zacks Rank #3.
Shares of Occidental Petroleum and Chevron have gained 13.4% and 7.6%, respectively, so far this year.
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2 Beloved Warren Buffett Stocks to Watch on Rise in Oil Prices
Warren Buffett is unquestionably the paragon of well-reasoned investing. He entered the investing game quite early and accomplished tremendous success by placing bets on companies having competitive advantages.
Buffett believes in acquiring and holding companies that have a promising business model, generate income unswervingly, and provide dividends, indicating sustainable growth. Companies that generate plenty of cash also fall under the ambit of the Oracle of Omaha’s investment viewpoint.
It is, thus, worth mentioning that Warren Buffett-led Berkshire Hathaway Inc (BRK.B - Free Report) has been loading up on oil companies in recent times. However, most market participants are consumed by AI optimism, betting big on semiconductors like NVIDIA Corporation (NVDA - Free Report) (read more: Nvidia a Must-Buy After AI-Fueled Blowout Earnings).
Warren Buffett’s inclination toward energy players is due to an uptick in oil prices for quite a while. Brent crude is approaching the $90 a barrel mark, which is a significant high, while the West Texas Intermediate (WTI) crude is advancing the $86 a barrel mark, the highest level in five months.
Bank of America Corporation’s (BAC - Free Report) analysts also have raised their crude oil forecast for this year. Oil prices are gaining traction amid prospects of higher demand and supply shortages owing to the geopolitical crisis.
The American Petroleum Institute recently reported that there has been a drop in U.S. inventories, with crude oil shedding 2.3 million barrels. At the same time, expansion in manufacturing activity in China for the first time in six months in March indicates growing demand for oil soon.
On the other hand, a Ukrainian drone strike on a Russian refinery and Israel’s strike on Iran’s embassy in Syria are all set to disrupt the supply of oil.
Thus, with oil prices advancing after taking a beating at the end of 2023, it’s prudent for investors to keep an eye on Warren Buffett’s favorite, Occidental Petroleum Corporation (OXY - Free Report) and Chevron Corporation (CVX - Free Report) .
During the first week of February, Warren Buffett spent a whopping $245.7 million on purchasing shares of Occidental Petroleum. The company has become one of Berkshire Hathaway’s top public equity holdings.
Occidental Petroleum has come a long way from going bankrupt in 2020 to being one of the most sought-after oil companies this year. Production from Permian resources stood in good stead for Occidental Petroleum. Its operation in the Permian Basin is expected to expand, banking on the company’s acquisition of CrownRock L.P.
Occidental Petroleum’s sale of non-core assets helped trim its outstanding debt. Occidental Petroleum has kept operational expenses under check and generated considerable income from sales since its net profit margin is 16.2%, more than 10%, signifying a healthy margin.
Occidental Petroleum has solid fundamentals since it has paid constant dividends to its shareholders. In the past 5-year period, OXY has increased its dividend four times, and its payout has advanced 0.8%. Occidental Petroleum has a dividend yield of 1.31%. Check Occidental Petroleum’s dividend history here.
The Zacks Consensus Estimate for its next-year earnings has increased by 1.9% over the past 30 days. OXY’s expected earnings growth rate for the next year is 34.4%. The company currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.
Chevron also occupies a top spot in Berkshire Hathaway’s equity holdings. Chevron’s leading position in the money-spinning Permian Basin is providing the company with maintainable production growth. The company’s present acquisition of Hess Corporation is expected to help it sustain earnings growth and cash inflows.
Chevon has an encouraging net profit margin of 10.6%. In the past 5-year period, CVX has increased its dividend five times, and its payout has advanced 6.1%. Chevron has a dividend yield of 4.08%. Check Chevron’s dividend history here.
The Zacks Consensus Estimate for its current-year earnings has increased by 2% over the past 30 days. CVX’s expected earnings growth rate for the next year is 18.7%. The company currently has a Zacks Rank #3.
Shares of Occidental Petroleum and Chevron have gained 13.4% and 7.6%, respectively, so far this year.
Image Source: Zacks Investment Research