We recently published a list of Growth Stock Portfolio: 12 Stock Picks By Warren Buffett. In this article, we are going to take a look at where Occidental Petroleum Corporation (NYSE:OXY) stands against other growth stock picks by Warren Buffett.
Warren Buffett’s Berkshire Hathaway portfolio has long been a beacon for value investors looking for high-quality businesses with long-term competitive advantages. Since taking over as CEO of Berkshire six decades ago, the appropriately named “Oracle of Omaha” has outperformed the broader market.
As we approach 2025, some of Berkshire’s assets stand out as promising opportunities, combining excellent fundamentals with acceptable values despite the market’s sustained emphasis on technology and growth stocks.
Berkshire’s CEO is a strong believer in portfolio concentration. Buffett’s investment strategy revolves around choosing companies with significant competitive advantages, effective management teams, and the potential to create regular free cash flow. His concept focuses on buying exceptional firms at acceptable costs rather than inferior enterprises at low rates. This strategy has proven successful across numerous market cycles, with Berkshire Hathaway providing compound yearly returns significantly higher than market averages over several decades.
The “Oracle of Omaha” concentrates on companies he understands, avoiding complex technologies or models with uncertain earnings potential. He looks for companies with pricing power, great brand awareness, and the ability to preserve or grow market share even during economic downturns. Buffett’s conservative yet effective approach has helped him become one of history’s most successful investors.
Following the filing of Berkshire’s 13F on February 14, we now know that 60% ($180 billion) of Buffett’s $299 billion portfolio is concentrated in just four magnificent stocks.
Japanese stock investors are attentively watching Buffett’s letter in the hopes of gaining information that may affect the country’s trading houses. Buffett has previously approved Japanese trading companies, resulting in increased stock value. Market participants will examine his comments for clues about the future of these companies, particularly as they are impacted by decreasing energy prices and pressure from the US government to reduce oil expenses.
As usual, Buffett’s shareholder letter is expected to provide significant insights not only into Berkshire Hathaway’s performance but also into market trends.
Oil derricks in the background with a few workers in the foreground, emphasizing the company’s oil and gas production activities.
Methodology
For this article, we scanned Warren Buffett’s Q4 2024 portfolio. We then chose 12 stocks with the highest 5-year average revenue growth (YoY) and ranked accordingly.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Occidental Petroleum Corporation (NYSE:OXY)
5-year average revenue growth (YoY): 11.94%
Occidental Petroleum Corporation (NYSE:OXY) is among the biggest independent producers of gas and oil in the world. Its upstream activities are spread throughout North Africa, the Middle East, and the US. The company claimed to have net proven reserves of around 4 billion barrels of oil equivalent at the end of 2023. In 2023, net production reached 1,234 thousand barrels of oil equivalent per day on average, with around 50% of the output coming from natural gas and 50% from oil and gas liquids.
One of the biggest producers of oil and gas (O&G) in the US, Occidental Petroleum Corporation (NYSE:OXY) also runs subsidiaries in the chemical and renewable energy industries. It owns a majority equity stake in Western Midstream and operates a consolidated midstream business that offers gathering, processing, and transport services to the upstream segment. The portfolio also consists of a chemical company that manufactures PVC and caustic soda. The latter segment’s profitability is dependent on the health of the overall economy, although it enjoys lower energy and ethylene costs.
By making significant investments in carbon capture technology, the company has positioned itself as a progressive leader in the energy sector, supporting the objectives of the global energy transition. The company’s excellent cash flow, prudent management, and strategic approach position it for future growth, even though an immediate increase in oil prices may not be anticipated. Despite market volatility, Occidental Petroleum Corporation (NYSE:OXY) is a great possibility for long-term investors because it provides an appealing risk-reward ratio at its current value.
Furthermore, Occidental Petroleum Corporation (NYSE:OXY) is an excellent choice for investors due to its dividend policy. For the past 45 years, the business has been paying dividends to stockholders on a regular basis.
Overall, OXY ranks 7th on our list of Growth Stock Portfolio: 12 Stock Picks By Warren Buffett. While we acknowledge the potential for OXY to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than OXY but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
