For roughly six decades, Warren Buffett has generated wealth-building returns for Berkshire Hathaway's shareholders. The legendary investor has an uncanny knack for finding superior businesses with underappreciated growth opportunities. Buffett's talents have made him one the wealthiest people in the world -- and created many millionaires among Berkshire's shareowners.
You, too, could grow richer alongside Buffett by investing in his best ideas. Here are two of Berkshire's largest stock holdings, both of which remain solid buys today.
Warren Buffett stock to buy No. 1: Occidental Petroleum
Buffett has long appreciated the value of reliable and cost-effective energy sources. One of his favorite companies is Occidental Petroleum (OXY 0.75%). Berkshire owns over $14 billion worth of the oil and gas producer's common stock, along with additional preferred stock and warrants that give it the option to increase its stake in the future.
Occidental's operations are providing its customers with dependable energy at a time when conflicts in Europe and the Middle East threaten to disrupt international supply networks. Occidental owns some of the most valuable acreage in the U.S., including 2.8 million acres in the oil-rich Permian Basin.
Moreover, Occidental's $12 billion acquisition of CrownRock in August bolstered its ability to produce low-cost energy, with some assets even capable of generating a profit when oil trades for less than $40 per barrel. With the price of crude oil currently trading for more than $75 per barrel, Occidental and its shareowners stand to profit handsomely.
Occidental earned $1.3 billion in free cash flow in the second quarter. The company is prudently using some of this cash to pay down debt and strengthen its balance sheet. It's also passing some of this cash on to shareholders via dividends. Occidental raised its quarterly cash payout by 22% to $0.22 per share in February. Its stock currently yields a solid 1.6%.
Looking ahead, decarbonization solutions represent a massive growth opportunity. Occidental's expertise with enhanced oil recovery techniques, which use carbon dioxide to harvest more oil from older fields, should give it a powerful advantage in the high-potential area of carbon capture, utilization, and storage. CEO Vicki Hollub plans to supply the technical know-how that other businesses will use to remove carbon dioxide from the atmosphere and store it underground or harvest it for other use cases. Hollub thinks there could eventually be 1,000 such carbon capture facilities across the globe.
ExxonMobil estimates that the market for these and other carbon management services will grow to a shocking $4 trillion by 2050. Occidental is likewise enamored with the industry's prospects. So much so that its leadership believes its carbon-related ventures could one day produce more profit than its oil and gas operations. Consider buying Occidental's shares now before more investors come to appreciate this innovative energy producer's vast growth potential.
Warren Buffett stock to buy No. 2: Apple
Much has been made of Buffett's decision to sell roughly half of Berkshire's stake in Apple (AAPL -1.32%). But what many investors overlooked was that the legendary investor decided to hold on to 400 million shares of the technology titan, a stake valued at a whopping $88 billion dollars.
It's clear why Buffett made sure Apple remains Berkshire's largest stock holding by far. (Its stake in its second-biggest holding, American Express, stands at roughly $42 billion.) The iPhone maker is still one of the most profitable businesses in history, and it could be on the verge of a massive artificial intelligence-fueled upgrade cycle.
In September, the tech giant unveiled Apple Intelligence. The suite of AI-powered features promises to make the company's latest iPhones, iPads, and Macs even more useful. People can use Apple's new "personal intelligence system" to quickly write and summarize texts and emails, edit photos, and create personalized images. Apple also gave Siri, its personal assistant technology, an AI-driven performance upgrade to improve its ability to understand and respond to natural language prompts.
Importantly, Apple designed its new AI tools with privacy in mind, so user data is used only for specific user requests and never stored. That's in stark contrast to several of Apple's AI rivals, which have been criticized for misleading users about the true extent of their data-collection activities and failing to protect user confidentiality.
Apple's new AI features are thus expected to boost sales of its phones and computers -- and allow it to charge higher prices for its devices over time. Demand for advanced AI features should also lift Apple's high-margin services revenue via higher App Store sales.
With more than 2.2 billion devices in use around the globe, Apple is in prime position to become a formidable force in the rapidly expanding AI arena. All told, Wall Street expects the tech leader to grow earnings by more than 11% annually over the next half-decade. That's an impressive pace of expansion for a $3.5 trillion business. Buy shares today, and you can position yourself to profit as Apple enters a new phase of AI-powered growth.
