Warren Buffett Just Bought 7 Stocks. Here's the Best of the Bunch for Value Investors.

Keith Speights

Updated Thu, Sep 19, 2024, 1:34 AM 4 min read

Buffett's Q2 buys

Buffett initiated new positions in only two stocks during Q2. He purchased 1.04 million shares of aerospace and electronics company Heico (NYSE: HEI) for Berkshire Hathaway's (NYSE: BRK.A) (NYSE: BRK.B) portfolio. He also bought over 690,000 shares of cosmetics retailer Ulta Beauty (NASDAQ: ULTA).

Arguably the most expected trade for Buffett during the second quarter was his scooping up 7.26 million additional shares of Occidental Petroleum (NYSE: OXY). The oil stock ranks as Berkshire's sixth-largest holding. Buffett said in his letter to Berkshire Hathaway shareholders earlier this year that he expects to own a stake in Occidental "indefinitely."

Another purchase for Buffett in Q2 shouldn't come as a shock, either. He increased Berkshire's position in Chubb (NYSE: CB) by nearly 4.3%, adding 1.11 million shares of the big insurer. After initiating a position in Chubb last year, it now ranks as Berkshire's ninth-largest holding.

The other three buys for Buffett in Q2 share a common denominator. He bought 2.43 million shares of Liberty SiriusXM Group Class A (NASDAQ: LSXMA) and 4.52 million shares of Liberty SiriusXM Group Class C (NASDAQ: LSXMK). Both stocks reflected Liberty Media's interest in Sirius XM Holdings (NASDAQ: SIRI). For good measure, Buffett also bought 96.2 million shares of Sirius XM itself, boosting Berkshire's stake in the satellite radio and podcast company by more than 262%.

Several stocks that value investors might like

I think value investors might like several of the stocks Buffett bought in Q2. Actually, the only stock we can easily cross off the list is Heico. Its shares trade at a sky-high forward price-to-earnings ratio of 61.3.

Ulta Beauty could be too expensive for some value investors. However, its forward earnings multiple of 16.3 isn't bad. That's especially the case considering that the S&P 500 currently trades at 21.5 times forward earnings.

But value investors should feel quite comfortable with Buffett's other Q2 buys. Sirius XM trades at a hair below 12 times forward earnings. Chubb's forward earnings multiple is 11.9.

Occidental Petroleum is even cheaper, trading at 11 times forward earnings. The fact that Berkshire Hathaway has won regulatory approval to acquire up to 50% of the company and only owns 27.3% of Oxy now should give value investors even more confidence in the stock.

The best of the bunch

The best of the bunch for value investors among Buffett's Q2 purchases would have been a tie between Liberty SiriusXM Group Class A and Liberty SiriusXM Group Class C. As of Sept. 9, 2024, both stocks traded at a little over 6.5 times forward earnings.

Note the use of the past tense in the above statement, though. Neither stock is available for purchase anymore. Last week, a merger between Sirius XM Holdings and Liberty SiriusXM Group was completed, along with an accompanying 1-for-10 reverse stock split. With the Liberty SiriusXM Group stocks out of contention, that leaves Occidental as the easy pick as the best of the bunch for value investors.

If you want a reason in addition to a low valuation to buy Oxy, check out the company's investment in direct air capture, a type of carbon capture where carbon dioxide is sucked out of the air. If this technology is successful, Occidental Petroleum could be a massive winner for years to come.

Should you invest $1,000 in Occidental Petroleum right now?

Before you buy stock in Occidental Petroleum, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Occidental Petroleum wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $715,640!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.

See the 10 stocks ?

*Stock Advisor returns as of September 16, 2024

Keith Speights has positions in Berkshire Hathaway and Chubb. The Motley Fool has positions in and recommends Berkshire Hathaway and Ulta Beauty. The Motley Fool recommends Heico and Occidental Petroleum. The Motley Fool has a disclosure policy.

Warren Buffett Just Bought 7 Stocks. Here's the Best of the Bunch for Value Investors. was originally published by The Motley Fool

Terms

and

WA Consumer Health Privacy Policy

Your privacy controls