Warren Buffett, famously known as the “Oracle of Omaha,” remains one of the most respected investors of all time. His influence runs deep, with countless investors not only taking his advice but also mirroring his portfolio moves.
As we approach 2025, Buffett appears increasingly selective, showing little interest in new buys. Yet, his success lies in his ability to identify long-term stocks, companies with sustainable competitive advantages that deliver value over time.
Recently, Berkshire Hathaway (NYSE: BRK.A) revealed that Buffett has been trimming certain holdings, notably reducing his stake in Apple (NASDAQ: AAPL) by 20% while steering clear of major new acquisitions.
Picks for you
This conservative strategy reflects current economic uncertainties but also signals Buffett’s enduring confidence in core investments such as Nu Holdings (NYSE: NU) and Occidental Petroleum (NYSE: OXY), both valued under $100, which he believes are well-positioned to weather market fluctuations.
Nu Holdings (NU) stock
Nu Holdings has captured a significant share of Latin America’s unbanked population, expanding its customer base from 33.3 million at the end of 2021 to an impressive 104.5 million by the second quarter of 2024.
Operating as a fully digital bank, this rapid growth is fueled by its presence in Brazil, Mexico, and Colombia, regions where traditional banking services are limited.
To sustain this expansion and enhance customer experience, Nu recently launched advanced generative artificial intelligence (AI) tools aimed at personalized customer data analysis and strengthened cybersecurity measures.
Additionally, Nu introduced its own cellular service, NuCel, broadening its offerings beyond financial services, boosting customer engagement, and enhancing retention.
Nu’s financial performance mirrors its rapid expansion. In Q2 2024, the company posted a remarkable 65% year-over-year revenue increase, fueled by heightened user activity and strong customer acquisition.
Despite its operational scale-up, Nu has managed to keep costs stable, with the average service cost per active customer rising only slightly from $0.80 in 2021 to $0.90 in early 2024, demonstrating its economies of scale.
Nu’s profitability has attracted significant attention from major investors, including Israel Englander, who increased his stake by 371% last quarter. Cathie Wood’s ARK Innovation (ARKK) fund also holds 2.12 million shares, underscoring widespread confidence in Nu’s long-term growth potential.
Currently trading around $15 with a forward price-to-earnings (P/E) ratio of 25, Nu presents an appealing valuation in light of its growth prospects.
Analysts are watching closely as the company prepares to release its Q3 earnings on November 13, 2024, which could offer further insights into its performance.
For long-term investors, Nu’s robust growth trajectory and expanding service ecosystem make it a compelling buy as it captures more of the Latin American digital banking market.
Occidental Petroleum (OXY) stock
Occidental Petroleum is Warren Buffett’s second-largest energy investment and his sixth-largest holding overall, reflecting his confidence in the company’s long-term value.
Currently trading at around $50.5, OXY is near its two-year lows, presenting an attractive entry point for investors looking to enter the energy sector. Berkshire Hathaway holds 255.3 million shares of Occidental, valued at approximately $16 billion, representing 5.75% of its portfolio.
Occidental’s valuation metrics strengthen its appeal within the sector, with a trailing P/E ratio of 13.33 and a forward P/E ratio of 17.21, suggesting it remains undervalued.
Over the past year, OXY’s price has declined by 17.5%, further enhancing its attractiveness for value-focused investors.
Moreover, Occidental recently acquired CrownRock, a prominent shale oil producer, for $12 billion, enhancing its capacity to capitalize on a potential rebound in oil prices.
Occidental’s focus on carbon capture technology showcases its commitment to sustainable energy practices, aligning with global environmental goals and boosting its appeal as an ESG-conscious investment.
On November 6, Occidental further attracted investor interest by announcing a quarterly dividend of $0.22 per share, payable on January 15, 2025.
Following this announcement, shares rose 2% and gained additional momentum amid a broader rally in energy stocks, fueled by an increase in WTI.
For investors seeking steady, long-term growth, Nu Holdings and Occidental Petroleum offer attractive value opportunities aligned with Buffett’s investment philosophy.
Both companies are well-positioned within their sectors and demonstrate promising growth potential, making them solid additions to a long-term portfolio.
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