2 Warren Buffett Stocksto Buy Hand Over Fistand 1to Avoid The Motley Fool

Published in Stocks and Investing on Thursday, August 14th 2025 at 7:56 GMT by The Motley Fool
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Investors often look to Warren Buffett's investment portfolio for a source of ideas. Here are two Buffett stocks I'd buy today, plus one stock to avoid.

2 Warren Buffett Stocks to Buy Hand Over Fist

Warren Buffett, the legendary investor and CEO of Berkshire Hathaway, has long been revered for his value investing philosophy, which emphasizes buying high-quality companies at reasonable prices and holding them for the long term. His portfolio, managed through Berkshire Hathaway, serves as a blueprint for many investors seeking stable, compounding returns. In recent times, amid market volatility driven by economic uncertainties, inflation concerns, and geopolitical tensions, Buffett's moves have drawn even more attention. Notably, his recent 13F filings reveal strategic additions to certain holdings, signaling confidence in their future prospects. This article delves into two standout stocks from Buffett's portfolio that appear particularly attractive for investors looking to buy "hand over fist"—a phrase Buffett himself might appreciate for its emphasis on conviction. These are Apple (NASDAQ: AAPL) and Occidental Petroleum (NYSE: OXY), both of which embody the principles of durable competitive advantages, strong management, and resilience in challenging environments.

Starting with Apple, it's no secret that this tech giant has been Berkshire Hathaway's largest equity holding for years, representing a significant portion of the conglomerate's stock investments. Buffett first began accumulating shares in 2016, and despite some trimming in recent quarters—likely for tax or portfolio rebalancing reasons—Apple remains a core position. What makes Apple a stock to buy aggressively right now? For one, its unparalleled brand strength and ecosystem lock-in create a moat that's nearly impossible for competitors to breach. Think about the iPhone, which continues to dominate the premium smartphone market, generating billions in recurring revenue through services like the App Store, Apple Music, and iCloud. In the most recent fiscal quarter, Apple's services segment alone grew by double digits, offsetting any slowdown in hardware sales due to economic headwinds.

Moreover, Apple's innovation pipeline is robust. The company is pushing boundaries in augmented reality, health tech, and artificial intelligence, with products like the Vision Pro headset and AI-enhanced features in iOS positioning it at the forefront of emerging technologies. Financially, Apple is a cash-generating machine. It boasts a massive cash reserve exceeding $60 billion, enabling aggressive share buybacks and dividends. Over the past decade, Apple has returned hundreds of billions to shareholders through repurchases, effectively boosting earnings per share and shareholder value. Buffett loves businesses with predictable cash flows, and Apple's ability to generate free cash flow in excess of $100 billion annually fits the bill perfectly. Valuation-wise, while Apple's price-to-earnings ratio hovers around 30, it's justified by its growth prospects and compared favorably to peers in the Magnificent Seven tech group. In a world where consumers are increasingly reliant on digital devices, Apple's ecosystem ensures customer loyalty, making it resilient to recessions. Buffett's continued endorsement—despite occasional sales—suggests he views it as a timeless compounder, much like his investments in Coca-Cola or American Express.

Shifting gears to the energy sector, Occidental Petroleum stands out as a more recent and aggressive bet by Buffett. Berkshire Hathaway has been steadily increasing its stake in Occidental since 2019, and in the latest filings, it owns over 25% of the company, making it one of the largest shareholders. This isn't just a passive investment; Buffett has provided financing for Occidental's acquisitions, including the massive Anadarko Petroleum deal, underscoring his belief in the company's strategy and leadership under CEO Vicki Hollub. Why buy Occidental hand over fist? The answer lies in the enduring demand for oil and gas, coupled with Occidental's operational excellence and focus on low-cost production.

Occidental is a major player in the Permian Basin, one of the most prolific oil-producing regions in the U.S., where it leverages advanced drilling techniques to extract resources efficiently. Unlike many energy firms battered by the shift to renewables, Occidental is adapting by investing in carbon capture and storage (CCS) technologies, positioning itself as a leader in sustainable energy transitions. This forward-thinking approach could unlock new revenue streams, especially as governments and corporations push for net-zero emissions. Financially, the company has strengthened its balance sheet dramatically. After the Anadarko acquisition saddled it with debt, Occidental has paid down billions, improving its credit profile and reducing interest expenses. In the current environment of elevated oil prices—driven by supply constraints and geopolitical risks—Occidental's cash flows are booming. It reported record free cash flow in recent quarters, allowing for debt reduction, dividends, and share repurchases.

Buffett's affinity for Occidental aligns with his preference for commodities businesses with strong assets and management that can navigate cycles. Energy stocks like this offer a hedge against inflation, as rising commodity prices directly boost profitability. At a forward P/E ratio under 10, Occidental appears undervalued relative to its peers and historical averages, especially considering its production growth targets. The company's dividend yield, around 1.5%, provides income while investors wait for capital appreciation. Critics might point to the volatility of oil prices or the long-term shift away from fossil fuels, but Buffett's history with energy investments (like his stake in Chevron) shows he bets on enduring demand. Occidental's strategic acquisitions and efficiency gains suggest it could thrive even in a lower-oil-price scenario.

In summary, both Apple and Occidental Petroleum exemplify Buffett's investing tenets: wide moats, excellent capital allocation, and the potential for long-term wealth creation. Apple offers growth through innovation and consumer staples-like reliability, while Occidental provides value in a cyclical but essential industry. Investors buying these stocks hand over fist could benefit from Buffett's wisdom, especially in uncertain times. Of course, as with any investment, due diligence is key—consider your risk tolerance and market conditions. But following the Oracle of Omaha has historically paid off handsomely, and these two picks look poised to continue that tradition. (Word count: 842)

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