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This Warren Buffett stock presents entry for savvy investors

This Warren Buffett stock presents entry for savvy investors
Elmaz Sabovic

Whether you’re a seasoned investor or just starting, it’s wise to take cues from established, successful traders like Warren Buffett, the Chairman of Berkshire Hathaway (NASDAQ: BRK.A). 

Right now, one of his top picks, Occidental Petroleum (NYSE: OXY) stock, has seen a favorable dip, offering traders an entry opportunity.

OXY stock entry point opportunity. Source: TrendSpider
OXY stock entry point opportunity. Source: TrendSpider

With OXY shares experiencing a pullback to $65 from a closing of $67, an opportunity arises as there’s a support zone of $65.98.

On the other hand, a resistance zone stretching from $69.04 to $69.26, formed by multiple trend lines across different time frames, exists.

What should further bolster Binvestors confidence is the fact that Buffett doesn’t plan on selling any stake in his Occidental Petroleum holding.

Why is Buffett such a fan of OXY stock?

Warren Buffett’s endorsement of Occidental Petroleum stock should not be taken lightly. Berkshire Hathaway’s ownership of nearly 244 million shares, which has been steadily added to since 2019 and is now worth $14.5 billion, accounts for 28.2% of total company ownership. 

This significant stake is a testament to OXY stock’s potential and the Oracle of Omaha’s confidence in it.

Fossil fuels like oil, coal, and natural gas contribute to global warming by producing carbon dioxide (CO2) emissions. Carbon capture technology aims to trap these emissions, but its widespread commercial implementation has been challenging. 

However, technological advancements make it more cost-effective, which is crucial as countries strive to reduce their carbon footprint. Occidental Petroleum is at the forefront of this effort, with projects like STRATOS in Texas, which are expected to capture large amounts of CO2 from the atmosphere. 

This captured CO2 can be utilized, for example, in enhanced oil recovery techniques, reducing emissions from oil wells. Occidental is also exploring other applications for captured CO2, such as producing industrial chemicals and polymers.

OXY shares aren’t the only oil producers in Buffett’s portfolio

OXY ranks as the sixth-largest public equity holding in Berkshire’s portfolio, with Chevron (NYSE: CVX) coming in as the fifth-largest. Berkshire has regained its position in OXY in less than four years.

During the fourth quarter of 2023, Berkshire’s significant stock purchase was primarily focused on Chevron. Berkshire boosted its Chevron stake by 14.4%, the first time it had purchased the stock in over a year, now owning 6.8% of Chevron.

Berkshire’s stakes in Chevron and Occidental Petroleum amount to over $34 billion, underscoring Buffett’s confidence in this sector and the anticipated value growth with adopting new technologies.

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