Got an extra $1,000 you're looking to park in an investment worth owning for a while? That's easier said than done right now. Although the market isn't exactly dangerous at this time, stocks are relatively expensive, given the degree of economic uncertainty ahead.
Nevertheless, a handful of tickers are not only still worth owning here but also worth buying at their current prices. If you need help finding some of these names, just start with the stocks Warren Buffett is holding, if not buying more of.
To this end, here's a closer look at three stocks currently found in Warren Buffett's Berkshire Hathaway(NYSE: BRK.A)(NYSE: BRK.B) portfolio that would likely be at home in your portfolio, too.
Sirius XM Holdings
It's not entirely clear what Buffett himself sees in Sirius XM Holdings(NASDAQ: SIRI), but he clearly sees something. Berkshire's 110 million-share stake in the company is one-third of Sirius itself, thanks to the purchase of another $42 million worth of the stock just within the past few days.
Of course, Sirius XM is North America's one and only satellite radio service, although the company is more than that. In addition to web-accessible access to its satellite-delivered programming, Sirius owns the internet radio platform Pandora. Roughly three-fourths of its revenue comes from subscription fees, and most of the rest comes from advertising.
It's a business model that's being increasingly questioned, and understandably so. There's a virtual universe of audio entertainment available online, and Pew Research reports that 90% of adults living in the United States own a smartphone -- they have their own web-connected entertainment device with them at all times, in and out of a vehicle.
Consumers arguably don't need satellite radio anymore. In this vein, the company's subscriber base has dwindled from its late-2022 peak of nearly 32.4 million to just under 31.5 million paying customers as of the middle of this year. It's not catastrophic, but it is a concern.
This attrition may also have run its full course, however, and is set to reverse direction. Sirius is still adding new podcasts, overhauling its pricing plans, and -- thanks to the introduction of an advertising-sales technology (Trade Desk's Unified ID 2.0, to be specific) -- is well positioned to grow the advertising aspect of its business, which will ultimately make its programming cheaper (or even free) to tune in to. This will also create and free up funds to do more marketing.
Of course, Sirius XM stock's forward-looking dividend yield of 4% isn't too shabby either.
Occidental Petroleum
Oil and gas stocks haven't always been Warren Buffett's cup of tea. Although most of these tickers pay good dividends when they can, these companies' bottom lines are closely tethered to unpredictable oil prices. The Oracle of Omaha generally isn't into these kinds of guessing games.
That's what makes his commitment to energy outfit Occidental Petroleum(NYSE: OXY) so interesting -- and telling. Since it was first added to Berkshire Hathaway's portfolio back in 2022, not only has Buffett continued to add to the position, but he's also made a point of touting it. As he wrote in this year's letter to Berkshire Hathaway shareholders:
Under Vicki Hollub's leadership, Occidental is doing the right things for both its country and its owners. No one knows what oil prices will do over the next month, year, or decade. But Vicki does know how to separate oil from rock, and that's an uncommon talent, valuable to her shareholders and to her country.
Buffett adds, "We particularly like its vast oil and gas holdings in the United States," most of which are in the well-proven Permian Basin and nearby areas.
But wait -- isn't the crude oil business on its way out? Not so fast.
While renewable energy sources, like solar and wind, are obviously the future, there's a growing need for power right now. It could take decades for this transition to do any permanent damage to the oil and gas business. Indeed, Bloomberg expects demand for oil to continue growing through 2035, with this demand only waning about 10% from that 2035 peak by 2050.
Translation: There's a lot of money to be made by extracting oil and gas from the ground in the meantime. Now, all of a sudden, Warren Buffett's seemingly unlikely interest in Occidental makes a lot of sense.
Bank of America
Finally, add Bank of America(NYSE: BAC) to your list of Buffett stocks to buy with $1,000 right now.
It's an eyebrow-raising call. If you keep tabs on Warren Buffett's trades, then you likely know Berkshire's been shedding its Bank of America (BofA) stake since the middle of this year, paring back its position in the big bank by about one-fourth of its peak size. He's still actively selling this stock, too. Plenty of investors have been interpreting these sales as a sign of impending trouble for the bank.
And, perhaps, Buffett is concerned about the company's foreseeable future.
There's also a distinct possibility, however, that Berkshire's simply scaling back on a (very) profitable trade before potential changes in tax laws can go into effect that might make unrealized gains on big trades taxable. In this vein, Berkshire has also been selling pieces of its profitable position in Apple of late, which is still Berkshire's biggest trade despite the recent culling.
Also, even with the frantic panic resulting from the streak of sales since July, the remaining 766 million-share, $32.4 billion stake in BofA leaves it as Berkshire's third-biggest holding. Maybe Buffett is just trying to reduce his position in BofA to less than 10% of the bank itself, which lifts the requirement to immediately disclose any buys or sales of the stock in question.
Sure, like most other banks, this one's grappling with waning loan demand and rising loan defaults. Last quarter's net interest income slipped 3% year over year, while charge-offs for soured loans -- although still absorbable -- grew 65% for the same timeframe.
There's a reason shares of Bank of America have been climbing since August's low, however, and are back within sight of new 52-week highs. Take that hint while the stock's forward-looking dividend yield stands at just under 2.5%. You'll be plugging into one of the biggest leading names in a business the world absolutely needs.
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*Stock Advisor returns as of October 21, 2024
Bank of America is an advertising partner of The Ascent, a Motley Fool company. James Brumley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Bank of America, and Berkshire Hathaway. The Motley Fool recommends Occidental Petroleum. The Motley Fool has a disclosure policy.
