Warren Buffett is the Chairman and CEO of Berkshire Hathaway (BRK.A) (BRK.B), a multinational holding company. Berkshire Hathaway owns nearly 53 companies, primarily blue-chip companies with strong balance sheets, attractive valuations, and solid growth prospects. Buffett’s portfolio is diversified across the information technology, financial services, consumer staples, and energy sectors.
Warren Buffett’s portfolio has been an investment guide for many investors for decades due to his impressive track record. Berkshire Hathaway’s portfolio value increased from $331 billion to $364 billion by the end of the first quarter.
So, we think it could be wise to invest in Warren Buffett stocks Occidental Petroleum Corporation (OXY), Celanese Corporation (CE), and McKesson Corporation (MCK), given their solid growth potential. These stocks are rated Strong Buy or Buy in our proprietary POWR Ratings system.
Occidental Petroleum Corporation (OXY)
OXY engages in the acquisition, exploration, and development of oil and gas properties in the United States, the Middle East, Africa, and Latin America. The company operates through three segments: Oil and Gas; Chemical; and Midstream and Marketing. Warren Buffett recently purchased another 794,389 shares of OXY, bringing his stake in the company to 16.4%.
In the fiscal 2022 first quarter ended March 31, 2022, OXY's net sales increased 55.7% year-over-year to $8.53 billion. Its income from continuing operations grew 1,530.8% year-over-year to $4.88 billion.
The company's adjusted income attributable to common stockholders and adjusted earnings per common share came in at $2.13 billion and $2.12, up 1,664% and 1,513.3%, respectively, from the prior-year period.
The $8.91 billion consensus revenue estimate for the fiscal 2022 second quarter, ending June 2022, represents a 48.2% improvement from the same period in 2021. Analysts expect OXY’s EPS for the current quarter to increase 813.3% year-over-year to $2.92. The company has surpassed the consensus revenue, and the EPS estimates in each of the trailing four quarters.
OXY’s shares have gained 103.9% year-to-date to close the last trading session at $59.10.
OXY's POWR Ratings reflect this promising outlook. The stock has an overall B rating, which translates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
OXY has a grade of A for Momentum and B for Growth and Quality. Within the B-rated Energy - Oil & Gas industry, it is ranked #28 of 98 stocks. To see additional POWR Ratings (Sentiment, Stability, and Value) for OXY, click here.
Celanese Corporation (CE)
CE is a technology and specialty materials company. It manufactures and sells high-performance engineered polymers in the United States and internationally. The company operates through three segments: Engineered Materials; Acetate Tow; and Acetyl Chain. Buffett’s Berkshire Hathaway owns a 0.3% stake in the company.
On May 25, CE announced an increase in the selling prices of acetyl intermediate products, including acetic acid, vinyl acetate monomer, VAE emulsions, and acetic anhydride. The price increase is expected to boost the company’s profit margins and revenues.
In February, CE signed a definitive agreement to acquire DuPont’s Mobility & Materials business for $11 billion in cash. Celanese will gain a broad portfolio of engineered thermoplastics and elastomers, industry-renowned brands and intellectual property, a world-class organization, and global production assets.
“M&M will be a high-quality addition to Engineered Materials (EM) and will unlock significant opportunities to generate further customer and shareholder value. We are eager to welcome the M&M team to Celanese and jointly elevate the future growth and cash generation of the combined Celanese portfolio,” said Lori Ryerkerk, CE’s Chairman and CEO.
CE's net sales increased 41.2% year-over-year to $2.54 billion in the fiscal 2022 first quarter, ended March 31, 2022. Its operating profit stood at $531 million, up 62.9% year-over-year. Its adjusted EBIT rose 47.9% from the year-ago value to $713 million.
The company’s net earnings and adjusted EPS came in at $504 million and $5.54, registering increases of 56% and 60.1%, respectively, year-over-year.
The consensus revenue estimate of $2.40 billion for the fiscal 2022 second quarter, ending June 2022, represents an increase of 9.2% from the prior-year period. The company has topped the consensus revenue estimates in each of the trailing four quarters, and the consensus EPS estimates in three of the trailing four quarters, which is impressive.
The stock has declined 18.2% over the past three months and closed the last trading session at $119.73.
CE's POWR Ratings reflect this strong outlook. It has an overall grade of B, equating to Buy in our proprietary rating system. CE also has a grade of B for Quality. Within the A-rated Chemicals industry, it is ranked #38 of 91 stocks.
To see additional POWR Ratings (Sentiment, Growth, Value, Momentum, and Stability) for CE, click here.
McKesson Corporation (MCK)
MCK offers healthcare services in the United States and internationally. The company operates through four segments: U.S. Pharmaceutical; International; Medical-Surgical Solutions; and Prescription Technology Solutions (RxTS). It provides branded, generic, and over-the-counter pharmaceutical drugs and other healthcare-related products and services.
MCK offers distribution and services to wholesale, institutional, and retail customers in 13 European countries and Canada. Also, it serves biopharma and life sciences partners and patients. Berkshire reported new stakes in MCK earlier this year. It holds a 0.3% stake in the company as of March 31, 2022.
On June 23, MCK and HCA Healthcare, Inc. (HCA) agreed to form a joint venture combining MCK’s US Oncology Research and HCA’s Sarah Cannon Research Institute. “This new joint venture is an important step forward in increasing access to clinical trials, particularly within the community setting, where the majority of all cancer patients are initially treated,” said Brian Tyler, MCK’s CEO.
“Additionally, the joint venture directly aligns with McKesson’s strategic growth priorities by further expanding our differentiated oncology ecosystem and improving the value proposition for provider and biopharma partners,” he added.
In the fiscal 2022 fourth quarter ended March 31, 2022, MCK's revenues grew 11.8% year-over-year to $66.10 billion, and its adjusted gross profit improved 5.7% from the prior-year period to $3.37 billion. In addition, its adjusted earnings and adjusted earnings per share came in at $870 million and $5.83, up 7.4% and 15.5%, respectively, year-over-year.
The $267.61 billion consensus revenue estimate for the fiscal year 2023 (ending March 2023) represents a marginal growth from the last year. Analysts expect MCK’s EPS for fiscal 2023 to increase 9.4% year-over-year to $25.49.
The company has topped the consensus revenue estimates in each of the trailing four quarters, and the EPS estimates in three of the trailing four quarters.
The stock has gained 32% year-to-date and 71% over the past year to close the last trading session at $328.06.
MCK’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall grade of A, equating to a Strong Buy in our proprietary rating system. The stock has a B grade for Growth, Stability, Sentiment, Value, and Quality.
Within the Medical - Services industry, it is ranked #1 of 84 stocks. To see MCK’s Momentum grade, click here.
OXY shares were trading at $57.79 per share on Thursday morning, down $1.31 (-2.22%). Year-to-date, OXY has gained 100.20%, versus a -20.66% rise in the benchmark S&P 500 index during the same period.
About the Author: Mangeet Kaur Bouns
Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions.
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