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2 No-Brainer Warren Buffett Stocks to Buy Right Now | The Motley Fool

2 No-Brainer Warren Buffett Stocks to Buy Right Now

Warren Buffett, the legendary investor and CEO of Berkshire Hathaway, has long been revered for his value investing approach, which emphasizes buying high-quality companies at reasonable prices and holding them for the long term. Often called the "Oracle of Omaha," Buffett's strategy is rooted in principles he learned from his mentor, Benjamin Graham, focusing on businesses with strong economic moats, consistent earnings, and competent management. Over decades, his picks have delivered outsized returns, turning Berkshire Hathaway into a conglomerate worth hundreds of billions. In today's volatile market, where economic uncertainties like inflation, interest rate hikes, and geopolitical tensions loom large, investors are increasingly turning to Buffett's portfolio for guidance. Berkshire's latest 13F filings reveal a concentrated set of holdings, with a few standout names that Buffett has been accumulating or holding steadfastly. Among them, two stocks stand out as no-brainer buys right now: Apple (NASDAQ: AAPL) and Occidental Petroleum (NYSE: OXY). These aren't speculative bets but proven performers that align perfectly with Buffett's philosophy. Let's dive into why these could be smart additions to your portfolio, especially at their current valuations.

First up is Apple, the tech giant that has become Berkshire Hathaway's largest equity holding. Buffett first dipped his toes into Apple in 2016, and since then, Berkshire has amassed a staggering stake worth over $100 billion as of the latest reports. What makes Apple a no-brainer for Buffett? It's all about the company's unbreakable economic moat. Apple isn't just a hardware maker; it's an ecosystem builder. With over 2 billion active devices worldwide, including iPhones, iPads, Macs, and wearables like the Apple Watch, the company has created a loyal user base that's notoriously sticky. Once you're in the Apple ecosystem, switching costs are high—think seamless integration across devices, the App Store's vast library, and services like iCloud, Apple Music, and Apple TV+ that generate recurring revenue.

Financially, Apple is a cash-generating machine, which is music to Buffett's ears. In its most recent fiscal year, Apple reported revenue of $394 billion, with net income soaring to $99 billion. That's a profit margin of over 25%, driven by high-margin services that now account for about 22% of total revenue. The company's free cash flow is equally impressive, exceeding $100 billion annually, allowing it to fund massive share buybacks and dividends. Buffett loves companies that return capital to shareholders, and Apple has repurchased over $500 billion of its own stock since 2012, effectively boosting earnings per share. Despite its size, Apple continues to innovate—recent launches like the Vision Pro mixed-reality headset and advancements in AI through Apple Intelligence position it for future growth in emerging markets.

But why buy now? Apple's stock has faced headwinds from supply chain disruptions in China and a slowdown in iPhone sales growth, leading to a valuation that's more attractive than in years past. Trading at around 28 times forward earnings, it's not dirt cheap, but for a company with Apple's brand power and growth trajectory, it's a bargain compared to its historical averages or peers like Microsoft. Analysts project earnings growth of 10-15% annually over the next five years, fueled by services expansion and potential in markets like India and Southeast Asia. Buffett's continued confidence—Berkshire hasn't sold a single share despite market dips—signals that Apple is built for the long haul. In a world where tech valuations can swing wildly, Apple's stability and dividend yield of about 0.6% make it a defensive play with offensive upside. If you're following Buffett's advice to "be fearful when others are greedy and greedy when others are fearful," now's the time to pounce, especially with macroeconomic recovery on the horizon.

Shifting gears to the energy sector, Occidental Petroleum emerges as another Buffett favorite that's screaming "buy" in the current environment. Berkshire Hathaway began building its position in Occidental (often called Oxy) in 2019, but the real accumulation happened during the 2022 energy crisis, when Buffett scooped up shares amid soaring oil prices. Today, Berkshire owns about 29% of the company, making it one of Buffett's boldest bets in recent years. What draws Buffett to Occidental? It's a classic value play in a cyclical industry, but with a twist: strong management and a focus on low-cost production.

Occidental is a major player in oil and gas exploration, with significant assets in the Permian Basin, one of the most prolific shale regions in the U.S. The company's acquisition of Anadarko Petroleum in 2019, backed by Buffett himself through a $10 billion preferred stock investment, supercharged its production capacity. Today, Occidental produces over 1.2 million barrels of oil equivalent per day, with a heavy emphasis on efficient, low-breakeven operations. This efficiency is crucial in an industry prone to boom-and-bust cycles. Occidental's breakeven oil price is around $40 per barrel, meaning it can remain profitable even if crude dips below current levels of $70-80. Buffett appreciates businesses with durable competitive advantages, and Oxy's scale, technology (like enhanced oil recovery techniques), and carbon capture initiatives give it an edge in a transitioning energy landscape.

Financially, Occidental has turned a corner after years of debt-laden struggles. Post-Anadarko, the company aggressively paid down debt, reducing its net debt from $40 billion to under $20 billion. Free cash flow has exploded, reaching $12 billion in 2022 alone, enabling hefty dividends and share repurchases. The stock yields about 1.5%, and with oil prices stabilizing amid global demand recovery and geopolitical supply constraints (think OPEC cuts and Middle East tensions), earnings could remain robust. Analysts forecast earnings per share growth of 5-10% annually, but that's conservative; if oil averages $75, Oxy could easily outperform.

Why is this a no-brainer buy right now? The energy sector has cooled off after the 2022 rally, with Occidental's shares down about 20% from their peaks, trading at just 10 times forward earnings—a steal for a company with Oxy's assets. Buffett's massive stake underscores his belief in the enduring demand for fossil fuels, even as renewables grow. He's not betting on short-term oil spikes but on Occidental's ability to generate cash through cycles. Moreover, Oxy's push into low-carbon ventures, like its Direct Air Capture projects, aligns with Buffett's pragmatic view of energy transition—profitable innovation without abandoning core strengths. In a portfolio context, Occidental provides diversification from tech-heavy holdings like Apple, offering inflation protection and commodity exposure.

In conclusion, Apple and Occidental Petroleum exemplify Warren Buffett's timeless investing wisdom: buy wonderful companies at fair prices. Apple offers growth and stability in consumer tech, while Occidental provides value and resilience in energy. Both are backed by Buffett's billions, trading at discounts to their intrinsic worth, and poised for long-term gains. With markets facing uncertainty—from Federal Reserve policies to global elections—sticking to proven winners like these minimizes risk. As Buffett famously said, "It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price." If you're looking to invest like the Oracle, these two stocks are as no-brainer as it gets. Start small, think long-term, and let compounding do the work. (Word count: 1,048)

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