Top Picks: Warren Buffett's Easy-Peasy Stocks to Invest In Immediately
In a significant move, Chevron is working towards closing its acquisition of Hess, a move that is expected to enhance its growth outlook well into the 2030s. This acquisition comes as multiple catalysts are poised to fuel the rally of not only Chevron but also Occidental Petroleum, making them potential investments for value-seeking investors like Warren Buffett's Berkshire Hathaway.
Chevron, with its strong financial discipline and operational fundamentals, offers a solid dividend yield of about 5%, making it an attractive high-yield, buy-and-hold stock for income-focused investors amid sector volatility and geopolitical risks. The company maintains a strong balance sheet with a low debt-to-equity ratio of 0.20, as of Q1 2025, providing a stable foundation for its operations.
On the other hand, Occidental Petroleum's primary catalyst beyond oil prices lies in its aggressive deleveraging strategy. After accumulating debt from acquisitions, Occidental has been focused on rapidly reducing its debt load. It has already repaid $6.8 billion since late 2024, surpassing its earlier targets, which is expected to strengthen its balance sheet considerably. This deleveraging is seen as a critical factor that could fuel Occidental’s stock appreciation in the next several years.
Beyond oil prices, both companies have different upcoming catalysts tied to their business strategies and financial management. For instance, Occidental is commercializing the Stratos Direct Air Capture facility by selling carbon credits to customers desiring to lower their carbon footprint. Additionally, Occidental's chemical expansion projects, midstream contract expirations, and lower interest expenses from debt reduction will add $1 billion to its bottom line in 2026, rising to $1.5 billion in 2027.
Meanwhile, Chevron is investing in lithium to grow its lower-carbon energy businesses. The company has completed major projects like the Future Growth Project in Kazakhstan and Ballymore in the Gulf of Mexico, positioning it to generate an incremental $9 billion in free cash flow in 2026 at $60 per barrel of oil.
These resilient, long-term investment strategies have not gone unnoticed. Berkshire Hathaway, the company owned by Warren Buffett, holds 6.8% of Chevron's outstanding shares and 26.9% of Occidental's stock, making these positions worth $17.7 billion and $12.2 billion, respectively.
However, potential challenges remain. Escalating conflicts in the Middle East and between Ukraine and Russia could potentially lead to supply issues and cause crude prices to soar. Attacks on oil infrastructure could further drive up crude prices if tensions continue to rise.
Despite these risks, the investments in Chevron and Occidental Petroleum by Berkshire Hathaway underscore a belief in the resilience and long-term value of these companies beyond commodity price volatility. As these companies navigate their respective catalysts, they continue to be key players in the energy sector, offering potential opportunities for investors seeking resilient, long-term value.
- Chevron's strong financial discipline and operational fundamentals, as well as its solid dividend yield, make it an attractive investment for income-focused investors, especially amid sector volatility and geopolitical risks.
- Occidental Petroleum's deleveraging strategy, aimed at reducing its debt load, is seen as a critical factor that could fuel its stock appreciation in the next several years, making it a potential investment for value-seeking investors.
- Chevron is investing in lithium to grow its lower-carbon energy businesses, with plans to generate an incremental $9 billion in free cash flow in 2026 at $60 per barrel of oil.
- Beyond their oil and gas operations, Occidental is commercializing a direct air capture facility to sell carbon credits and has chemical expansion projects, midstream contract expirations, and debt reduction leading to lower interest expenses, which are expected to add significant value to its bottom line.
