Buffett's Top Stock Picks: Insights on Key Holdings

Buffett's investments reveal promising opportunities. Notably, Occidental Petroleum is focusing on debt reduction and dividend hikes, while Visa and Mastercard showcase strong revenue and EPS growth.

Date: 28-02-2025

AI Rating: 7

Investment Highlights
Warren Buffett's long-term investment strategy focuses on companies with strong fundamentals, as evidenced by his holding in Occidental Petroleum, Coca-Cola, Mastercard, and Visa.

Occidental Petroleum (NYSE: OXY)
Occidental has garnered attention due to its significant acquisition involving CrownRock, funded largely through debt. As the largest shareholder with a 28.2% stake, Buffett's confidence in the company’s management is notable. Despite concerns over rising debt, management has prioritized debt reduction, paying back $4.5 billion soon after the acquisition and aiming for further reductions by 2025. They anticipate boosting cash flows through the added oil production capabilities of CrownRock, along with divestments of non-core assets worth $1.2 billion. Furthermore, Occidental's recent quarterly dividend hike of 9% reflects a commitment to returning value to shareholders.

Visa (NYSE: V) and Mastercard (NYSE: MA)
The analysis mentions strong financial performance for Visa and Mastercard. Visa achieved a 10% revenue growth and a 17% increase in Earnings Per Share (EPS) for the full year 2024, processing about $16 trillion in transactions. Similarly, Mastercard reported 13% revenue growth with a matching 17% EPS growth. Both companies maintain impressive operating margins of 66% for Visa and 55% for Mastercard. Their duopoly position in the payments sector allows for significant profitability, and ongoing expansions into value-added services portend further growth opportunities.

Ratings
For Occidental Petroleum, the overall performance in reducing debt and enhancing cash flows offers a slightly positive outlook with a rating of 7. The consistent dividend increases indicate a stable financial environment.

Visa and Mastercard both receive high marks due to their strong revenues and EPS growth metrics, with ratings of 8, reflecting their powerful positions and potential for growth in the digital payments sector.

Overall, the report presents a generally positive outlook for investors considering Buffett’s recommended stocks, with opportunities for both growth and stability.

Stocks: OXY KO MA V