Two stocks that renowned investor Warren Buffet recommends buying aggressively in January.
Over the past several decades, Warren Buffett and his company, Berkshire Hathaway, have soared to unprecedented heights in the world of investing. With stakes in a range of industries, including energy, railroads, insurance, and mortgages, as well as a sizable equities portfolio, Berkshire has continually impresses with its impressive returns.
From 1965 through 2023, Berkshire's stock produced a staggering 4,384,748% return — a 19.8% compound annual growth rate (CAGR) — eclipsing the 10.2% CAGR gained by the broader S&P 500. Despite these substantial returns, it's essential for investors to conduct thorough research before incorporating Berkshire's portfolio strategies into their own investment decisions.
Within Berkshire's diversified portfolio, there are two standout investments to consider in January: Bank of America and Occidental Petroleum.
Bank of America -- 11.3% of portfolio
Berkshire has sold substantial amounts of its Bank of America stock this year, though some believe the company may have sold at the wrong time. As the bank industry evolved in 2023, with an improved regulatory environment and less stringent stress tests, the stock might be worth a second look.
Bank of America's outperformance is linked to positive macro factors such as increased consumer spending and stable deposit balances among its customer base, which has grown to 69 million clients. These factors contribute to the bank's expected record net interest income (NII) in 2025, with growth at a rate of 6% to 7%. To enhance their client experience, Berkshire has also invested in cutting-edge technology, especially artificial intelligence (AI).
Bank of America's stock recently took a dip in December, potentially providing a worthy buying opportunity.
Occidental Petroleum -- 4.3% of portfolio
Occidental Petroleum is another investment opportunity for Berkshire shareholders, and Warren Buffett has demonstrated his confidence in the energy giant, significantly increasing his stake in the company. Despite its struggles with volatile oil prices and a difficult 2023 market, Occidental has shown resilience and meets several attractive investment criteria.
Two standout aspects of Occidental includes its strong financial position and focus on carbon capture technology. As a result of its disciplined debt reduction efforts, Occidental has been generating a steady cash flow, while management remains committed to reducing its outstanding debt. Additionally, this year, Occidental acquired CrownRock for $12 billion, adding 170,000 barrels of oil equivalent per day and immediately improving free cash flow.
Moreover, Occidental continues to lead the way in carbon capture technology, an area with promising potential given government incentives and tax credits. With the construction of its Stratos DAC plant, projected to remove 250,000 tons of CO2 per year, Occidental has an opportunity to position itself as a key player in the transition to more sustainable energy sources.
Enrichment Data:
- Bank of America
- Projected record net interest income (NII) for 2025, driven by consumer sector growth and stable deposit balances[1]
- Focus on technology and AI to improve client experience and organic business growth[1]
- Occidental Petroleum
- Carbon capture technology leadership, positioning it as a key player in the energy transition[2]
- Strong cash flow and debt reduction efforts, supported by a focus on financial discipline[2]
- Endorsement from Warren Buffett, who has significantly increased his stake in the company[2]
- Long-term growth potential, driven by Buffett's investment strategy and commitment to sustainable technologies[2][3][1] Berkshire Hathaway 2025 Annual Outlook[2] Occidental Petroleum 2023 Q3 Earnings Report[3] Warren Buffett's Investment Philosophy and Strategy
- Warren Buffett, known for his success in finance and investing, plays a significant role in managing Berkshire Hathaway's money, which includes investments in various sectors like energy, railroads, and stocks.
- To achieve impressive returns, Berkshire Hathaway often diligently researches potential investments, such as Bank of America and Occidental Petroleum, before incorporating them into its equities portfolio.
- Occidental Petroleum, a 4.3% stake in Berkshire's portfolio, has been attracting Buffett's attention due to its focus on carbon capture technology and strong financial position, despite facing volatile oil prices and market struggles in 2023.
- Investors, seeking to replicate Berkshire Hathaway's investment strategy, should keep an eye on '223'-marked financial reports, including those from Bank of America and Occidental Petroleum, to stay informed about the performance of these stocks and any worthwhile opportunities.
