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We’ll start with an obvious statement: Warren Buffett, also known as the Oracle of Omaha, has a strong passion for investing. As the CEO of Berkshire Hathaway and one of the world’s richest individuals, he is renowned for formulating successful investment strategies. Despite market volatility, his knowledge enables him to maximize his gains. Buffett adheres to the principles of Benjamin Graham, seeking out undervalued securities and conducting a thorough analysis of the company before investing in them for the long term. His disciplined, diligent, and patient approach to investing has earned him a reputation as one of the world’s greatest investors.
Buffett’s investment portfolio is a prime example of diversification, with a balance of various stocks. In this article, we will take a closer look at the top five holdings in the Warren Buffett portfolio:
Top 5 Stocks to Buy from the Warren Buffett Portfolio
Top 5 Stocks to Buy from the Warren Buffett Portfolio in June 2023
- Top 5 Stocks to Buy from the Warren Buffett Portfolio
- Occidental Petroleum (NYSE: OXY)
- Occidental Petroleum Corporation operates through three segments: oil and gas, chemical and midstream, and marketing. Unlike other energy companies in the US, Occidental Petroleum focuses mainly on domestic production, with nearly 80% of its production coming from the US itself.
- Kraft Heinz (NASDAQ: KHC)
- Moody’s Corporation (NYSE: MCO)
- Activision Blizzard (NASDAQ: ATVI)
- BYD Company Limited (SHE: 002594)
Occidental Petroleum (NYSE: OXY)
Occidental Petroleum Corporation operates through three segments: oil and gas, chemical and midstream, and marketing. Unlike other energy companies in the US, Occidental Petroleum focuses mainly on domestic production, with nearly 80% of its production coming from the US itself.
Warren Buffett first invested $10 billion in 2019 in Occidental. Since then, he has bought shares of Occidental Petroleum twenty more times and has even sold the shares on two occasions.
His recent acquisition of almost 5.8 million shares of Occidental Petroleum is a green signal to investors to invest in this stock and buy and hold it even in uncertain times. Currently, Occidental forms somewhere approximately 3% of Buffett’s holdings. Q1 2023 saw net income come in at $983 million. The stock has a target of $71.84, a potential upside of almost 24% from its closing price on May 12. The role of domestic players will become more significant, and Occidental has a major role in fulfilling the country’s petroleum requirements.
Kraft Heinz (NASDAQ: KHC)
Most famous finger food joints in America are incomplete without Heinz ketchup sachets. Kraft Heinz is renowned for its wide range of products, including a variety of ketchup, toppings, mayonnaise, and sauces that enhance the flavors of the food.
Buffett holds a good shareholding in the company, with a stake of around 26.6%. Buffett first invested in Heinz in 2013 and was also involved in the merger between Heinz and Kraft in 2015. Miguel Patricio taking charge as CEO in 2019 has brought about a drastic change in the operations of the multinational which again paves the way for better market value in the future.
While the company might need to improve for some time, the financials show a different scenario. With the Q1 2023 earnings out, the company has announced that it will pay a dividend of $0.40 per share on June 30, thus making the dividend yield 3.9%, above the industry average. Now this makes this stock a must-have for those leaning toward dividend payouts. The company has been declaring good dividends to its shareholders, and while the capital appreciation is towards the lower end, the dividend payout ratio is around 46%. Over the next year, it is also expected that earnings per share can grow by 62.6%. So, any investor who thinks this stock can provide good returns and maintain their risk-return ratio should be cautious, research enough, and invest in times of high market volatility.
Moody’s Corporation (NYSE: MCO)
Warren Buffett added Moody’s to his portfolio in 2000 and held the stock since then. The stock is one of his longest-held holdings and the sixth-largest performer of his portfolio. Moody’s unique competitive advantage is why Buffett invested in this stock and has held it since then. Moody’s is the largest credit agency company in the United States and shares approximately 40% market share with S&P Global.
With data analytics being the world’s future, Moody’s Analytics is working rigorously to expand its operations. It has become a successful name in the analytics industry, thus providing the pathway to generating future profits with diverse business areas. Moreover, credit rating and data analytics have their peak periods of operations in different year cycles, making Moody’s Corp stock an all-weather, all-time stock. This is one of the significant reasons why Moody’s stock has been able to provide a return of over 20% every year, on average, for the last ten years. The company’s Q1 2023 earnings show a promising growth path, with total revenue at $14 billion, even in a depressed market.
Activision Blizzard (NASDAQ: ATVI)
Activision Blizzard has been a member of the S&P 500 since 2015. Warren Buffett has always tried to keep up with global trends, and to add up to that list; he started showing interest in the American video game giant Activision Blizzard in Q4 2021. The Call of Duty gained a lot of popularity, a franchise of Activision, and it even led to talks of Microsoft acquiring the gaming company. This was one of the reasons why Buffett invested in the company, which many criticized as a gamble since the acquisition required regulatory approvals, which were not provided by then. Buffett continued his investment till Q2 2022 and then sold around 15.7 million shares.
Though there have been many speculations regarding the Microsoft and Activision Blizzard deal, the UAE Federal Government has given the acquisition a stamp of approval. The UK has nixed the deal, but the deal is expected to get a go-ahead from the Eurozone. Moreover, expanding its businesses with the launch of new mobile games has increased the company’s profitability. With the deal getting closer to the end, the company’s market value is expected to increase, providing sweet returns to the shareholders.
BYD Company Limited (SHE: 002594)
BYD is a hi-tech Chinese automaker devoted to providing innovative solutions in automobile manufacturing. It researches, develops, manufactures, and sells rechargeable batteries and the photovoltaic business and is currently working majorly in the EV segment.
Warren Buffett first invested in BYD in 2008, and in the last 15 years, Warren Buffett has entered into multiple transactions, including buying and selling of the stock. Warren Buffett has been selling off many shares, but still, this EV company is a significant part of his portfolio. Warren Buffett aims to retain the stock and get good returns, which is his way with this stock.
While the company hasn’t been performing that great, what makes it attractive to hold for the near future is its large EV vehicle manufacturing capacity. It is one of the largest competitors of Tesla and was reported as the world’s largest plug-in hybrid and pure electric vehicle maker in 2022. It also sold 1.86 million cars, becoming a company growing faster than Tesla. The EV sector could see a boom as the world moves towards sustainability.
While every investor tries to diversify their portfolio with the inclusion of all kinds of market instruments – ETFs, mutual funds, hedge funds, index funds, growth stocks, dividend stocks, value stocks, large-cap stocks, mid-cap stocks, etc., what is more, important is the allocation of funds as per the risk-return ratio and risk tolerance of an individual. Many investors want returns in the form of dividend payouts, while some like it through capital appreciation. Another critical investment strategy is to rebalance the portfolio in both the cases of a bear market and a bull market. Rebalancing stocks that have performed historically is an art. Warren Buffett is a master artist in this area.
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