Warren Buffett knows a thing or two about picking winners. He wouldn't have a net worth of over $110 billion if he didn't.
It's easy to look back to find Buffett's biggest winners of the past. Names such as American Express, Apple (AAPL 0.27%), and Coca-Cola stand out.
But what about which of the legendary investor's stocks might make the list in the future? There's no way to know for sure. However, I predict that two stocks will be Buffett's biggest winners of the decade.
Setting the ground rules
Allow me to first clarify some details about my prediction. By decade, I'm referring to the period between Jan. 1, 2020, and Dec. 31, 2029. I know some people think the decade began in 2021, but those are the start and end dates I chose to use.
Also, I'm limiting my prognostication abilities to the stocks in Berkshire Hathaway's (BRK.A 0.07%) (BRK.B 0.30%) portfolio right now. It's entirely possible that Buffett could buy a stock next month that goes on to be one of his best performers. In addition, I'm assuming that he holds onto the two stocks I picked through the end of the decade (which may or may not be a good assumption).
Finally, my use of the term "biggest winners" refers to the stocks that deliver the highest percentage total returns over the decade.
Buffett's top two
Now for my prediction. I think that Buffett's two biggest winners of the decade will be (drum roll, please)... Amazon (AMZN 1.15%) and Occidental Petroleum (OXY +1.18%).
It's important to note that both stocks have started out the decade strongly. Even with the market meltdown of 2020 and the big slump last year, Amazon's shares are still up more than 30% so far this decade. The huge gain achieved in 2023 has helped tremendously.
NASDAQ: AMZN
Key Data Points
Sure, Occidental Petroleum's share price has fallen somewhat year to date. This decline, though, doesn't come close to offsetting the oil stock's great performance in recent years. Occidental stock has soared more than 40% since the beginning of the decade.
NYSE: OXY
Key Data Points
However, Buffett didn't own Oxy throughout this period. He had a previous position in the oil stock but exited it completely in the second quarter of 2020. Berkshire revealed that it had initiated a new position in Occidental in early March 2022. Since then, the stock has risen close to 25%.
Why they'll be big winners
I think that Amazon will be a big winner in the coming years for a couple of key reasons. Most importantly, the company's Amazon Web Services (AWS) cloud services business has phenomenal growth prospects.
Global IT spending is currently split more than 90% on-premises and less than 10% in the cloud. Amazon CEO Andy Jassy believes that these numbers will flip over the next 10 to 15 years. I agree, especially with AI fueling the transition. AWS will be a big beneficiary of the trend.
My view is that Amazon will make solid gains in its e-commerce business. The company's supply chain gives it a tremendous competitive advantage that isn't going away.
I also like Occidental's growth prospects. That might seem odd considering that some predict the demand for fossil fuels will decline. However, S&P Global Platts Analytics projects that oil demand won't peak until 2040. I suspect that timing is about right.
Occidental should have significant new opportunities in carbon capture as well. The company is investing heavily to build facilities that capture carbon directly from the air.
There's also the likelihood that Buffett isn't finished buying shares of Occidental. Berkshire's purchases can provide a real catalyst for the stock. The conglomerate currently owns close to 25% of Occidental but secured regulatory approval last year to acquire up to 50% of the company.
The biggest moneymaker for Buffett
Even if I'm right that Amazon and Occidental will be Buffett's biggest winners of the decade, they probably won't be his biggest moneymakers. Why? He doesn't own nearly as many shares of either company as he does of several others.
I predict that Buffett's biggest moneymaker will almost certainly be Apple. The tech giant currently ranks as Berkshire's biggest holding by far, comprising more than 48% of the conglomerate's total portfolio. If Apple's share price rises solidly over the next six and a half years (which I expect will happen), it should easily make more money for Buffett than Amazon and Occidental combined.
