3 Warren Buffett Stocks That Are Loud Buys Right Now

Looking to load up on some new stock for the long haul? There are countless ways to find them. However, one of the best means of doing this is still poaching a few of Warren Buffett’s picks. After all, they don’t call him the Oracle of Omaha for nothing.

With that as a backdrop, here’s a closer look at three of Buffett’s Berkshire Hathaway portfolio holdings. Most of Berkshire’s picks are solid long-term names. However, these three picks are screaming buys right now, in large part because they’re being knocked down undeservedly.

1. Occidental Petroleum

Contrary to common assumption, oil is not a dying business. It’s still growing, actually. The United States Energy Information Administration predicts that liquid fuels derived from crude oil will still be the planet’s main source of energy production until 2050. The world is simply not ready to make a radical shift to alternative energy.

However, the oil industry will continue to evolve during this period. Namely, oil companies will become smarter about staying in business.

Come in Occidental Petroleum (OXY -0.27%). It is not the most well-known name in the energy business. There’s a reason Buffett loves it enough to keep buying it, though. Not only is it well-versed when it comes to fracking, but the company is willing to restructure itself to optimize its operation. As Buffett wrote of Occidental CEO Vicki Hollub in a 2023 letter to Berkshire Hathaway shareholders, “Vicki knows how to separate oil from rock, and that’s an unusual talent that’s valuable to her shareholders and her country.”

Then there’s the other unexpected reason Buffett’s Berkshire now owns nearly 28 percent of Occidental (a stake of 255 million shares, $14.7 billion). This is his work on the carbon capture front. Simply put, carbon capture is the process of removing carbon — in the form of carbon dioxide — from the ambient air so that it does not harm the environment. The science is still relatively new and not yet fully refined. It do what it works, though, and is marketed.

An outlook from Polaris Market Research suggests that the annual market for direct air scavenging systems (DACS) will grow at an average annual rate of 58% through 2032, when it will be worth nearly $4 billion (although that’s an estimate -could ultimately prove too conservative). Whatever the case, the technology has the potential to extend the planet’s use of oil.

Shares of Occidental Petroleum are down 16% from their April high, largely in step with lower crude oil prices. It’s only a temporary swoon, though — for both of us.

2. Bank of America

You probably already know that Berkshire has divested much of its stake Bank of America (BAC 0.15%) just a few weeks ago. Namely, so far, he has sold shares of the bank worth almost 4 billion dollars. It’s certainly conceivable that more could be dropped in the near future as well.

Investors are taking the move as a red flag, and understandably so. After all, BofA’s second-quarter results weren’t exactly thrilling. Net income fell year over year despite modest revenue growth. Falling interest rates make borrowing less profitable at a time when borrowers are struggling to keep up with outstanding loan payments; bad loan charge-offs also nearly doubled year-over-year.

The end of the underlying economic tailwind is not quite visible on the horizon. That’s why no one blames Buffett for reducing the position, especially in light of potential increases in capital gains tax rates. The assumption, however, ignores several details.

First, while Berkshire Hathaway has sold a sizable portion of its Bank of America stake, it still owns much more. As of the latest known count, the conglomerate still owns more than 940 million shares of the bank worth a collective $37 billion. Buffett hardly abandoned the position. Perhaps he simply took some profits and rebalanced a portfolio that badly needed it while it made sense to do so.

Second, Buffett likes value stocks that generate lots of reliable cash. Headwinds or not, BofA still offers both. The stock is priced at less than 11 times next year’s estimated earnings, which are still expected to be better than this year’s, and the forward dividend yield stands at a healthy 2.7%. You can find higher returns, but you won’t find higher returns in banking at a comparable risk profile.

3. Kraft Heinz

Finally, add The Kraft Heinz Company (KHC 0.43%) to your list of Warren Buffett stocks screaming buys right now, while the stock is still down 65% from its 2017 peak and still near its 2020 low.

Kraft Heinz is one of Buffett’s rare missteps. He helped orchestrate the 2015 merger of then-separated Kraft and Heinz into one company with the expectation that synergies would be realized. The market even agreed for a while, driving newly minted shares higher following the merger.

Reality finally set in in early 2017, however. The stock then began a long and sharp sell-off, reflecting the fact that this pair simply did not perform as hoped. In 2019, Buffett admitted, “We were wrong in a few ways with Kraft Heinz,” adding that “We (Berkshire) overpaid for Kraft.” By then, however, it was too late. The mess was made. Many investors simply gave up on the company, assuming there was too much to deal with in the wake of the merger.

Not Buffett, though. Berkshire Hathaway still owns nearly 326 million shares of the downed stock, apparently anticipating an eventual rebound.

The thing is, it’s not a crazy wait. Relatively new CEO Carlos Abrams-Rivera understands what needs to be fixed and knows how to fix it. Innovation is again a priority, as are clever branding partnerships. For example, its Taco Bell Crunchwrap Supreme quesadillas are a hit with consumers. Kraft Heinz is also (finally) thinking meaningfully about running a profitable operation and using technology when and where appropriate to do so. Although not very many, these and other initiatives are beginning to produce steady and measurable growth.

There are legitimate concerns here, to be sure. Chief among them is that Kraft Heinz has raised its dividend payout since cutting it in early 2019 in an effort to address some of the nastier concerns on its balance sheet. However, the company is more than capable of covering its current payouts, and with earnings growth, dividend increases in the foreseeable future are not out of the question.