Warren Buffett owns a large number of stocks through his company, Berkshire Hathaway, but while the legendary investor is known for his stock-picking prowess, not every stock in his portfolio is worth a bet. And among those that are, few look so attractive right now that you could be missing something big if you ignore them anymore. Here are three such no-brainer Buffett stocks to buy right away if you have some idle money to park.
E-commerce and digital payments are the future
Shares of Visa (V -0.59%) came under some pressure after e-commerce giant Amazon threatened to ban payments using Visa cards on its platform in the U.K. starting this year. As expected, though, the two companies reached a deal in February, and that helped the fintech stock regain its mojo.
Image source: Getty Images.
Yet a surge in global coronavirus cases again and fears of renewed lockdowns and travel restrictions have taken the sheen off Visa stock again, but none of it should change the long-term prospects for the company.
The thing is, e-commerce is booming, and so are digital payments worldwide. Visa is a top finance payments platform in the world that facilitates transactions made using its co-branded cards and earns fees in return. Visa processed transactions worth nearly $10.4 trillion in 2021 and generated $24 billion in revenue, which was up 10% over 2020. Visa also raised its dividend by 17% in 2021. Visa's operating margins are as solid as ever.
V Operating Margin (TTM) data by YCharts
Visa is constantly innovating and investing in new-age technologies including facial verification, cross-border foreign currency exchange, blockchain, and cryptocurrency services. With the company about to release its second-quarter 2022 numbers on April 26, it's one Buffett stock you wouldn't regret owning.
Play the EV boom
General Motors (GM -0.17%) isn't the boring old carmaker anymore. In fact, GM's face could change almost entirely by the end of this decade if the company's aggressive growth plans are anything to go by.
Chances are, all you hear GM speak about these days is electric vehicles (EVs), and that's where the key to its growth lies. Global electric car sales, in fact, doubled in 2021. By 2025, GM aims to invest $34 billion into EV technology and launch 30 new EVs globally. By that year, GM says it could sell more than 1 million EVs annually.
Image source: Statista.
One thing you must know, though, is that GM's EV plans go beyond just cars. For example, GM's Ultium battery platform claims to build battery packs costing almost 40% lower than the one used in Chevrolet Beat EV and is eventually targeting 60% lower costs. This is significant, as batteries are the costliest components in EVs.
GM has struck multiple collaborations in recent months to secure supplies of key raw battery materials, like rare-earth metals and cobalt. Earlier this month, GM also announced plans to sell a series of "affordable EVs" built on Ultium by as early as 2027 in collaboration with Honda.
GM is also expanding beyond retail automotive. It has launched its supertruck, the GMC Hummer EV; it's working on a Chevrolet Silverado electric truck; and it has set up a new business called BrightDrop to target the logistics industry. After FedEx, GM recently signed up Walmart as a customer form its BrightDrop electric vans.
Wait, there's more. GM's self-driving arm, Cruise, is expected to launch its first autonomous car by January. Long story short, unlike most automakers that have jumped on the EV bandwagon, GM isn't just making electric cars but aspires to build an electric portfolio that's hard to match.
In particular, its latest plan to target the masses with affordable EVs is why GM makes for such an attractive stock right now. In fact, I believe this plan is so crucial that it could even attract another Buffett-like popular investor to GM stock: Cathie Wood. Her Ark Invest already owns some EV stocks, and it could only be a matter of time when she adds General Motors to her portfolio as well.
Make money from rising oil and gas prices
Occidental Petroleum (OXY 0.89%) is perhaps one of the most surprising buys by Buffett in recent weeks. Or, perhaps, the pace at which the Oracle of Omaha is buying the oil stock is what's surprising.
Buffett's link to Occidental goes back to 2019 when he invested $10 billion in Occidental's preferred stock to help finance the company's acquisition of Anadarko Petroleum. Buffett, though, scooped up common shares in Occidental frantically in March, and as last reported on March 16, Berkshire Hathaway held nearly 136.4 million shares, or a 14.6% stake, in the oil company.
Of course, the recent surge in oil and gas prices has added to Occidental's appeal, and one might argue that a drop in prices of fossil fuels could hurt Occidental's prospects. Truth is, Occidental has a lot more to it that helps offset oil and gas volatility to some extent: It has a midstream and marketing business, as well as an chemicals arm that makes basic chemicals and vinyls. Together, the two businesses brought in almost one-third of Occidental's revenue in 2021.
There's an even bigger thing about Occidental to note: It is a leader in carbon capture, usage, and storage (CCUS) technology that can effectively capture and use carbon dioxide emitted during operations, thereby helping the company tackle greenhouse gas emissions. Fossil fuels are a major contributor to greenhouse gas emissions, and in a world increasingly transitioning from fossil fuels to clean energy, Occidental's CCUS technology could be a game-changer.
Image source: Statista.
In the fourth quarter, Occidental generated free cash flows (FCF) worth $2.9 billion when oil prices averaged around $77 per barrel. With oil prices sitting well above $100 per barrel as of this writing and even spiking to multiyear highs in March, Occidental should have generated copious amounts of FCF in the first quarter. The company should be able to use that cash to repay debt, boost dividends, and repurchase shares, all of which should add to shareholder returns.
