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Invest Like Warren Buffett With These 3 Stocks

·4 min read

Warren Buffett, commonly referred to as the Oracle of Omaha, comes to many peoples’ minds when thinking of the financial world. He’s a widely-followed individual in the realm, and his track record of excellence within the market is precisely why.

Of course, investors keep close tabs on every move he makes. And in 2022, he’s been on the offensive, obviously seeing opportunities in an otherwise dim market.

Three companies that have seen buying activity from the Oracle of Omaha include Apple AAPL, Occidental Petroleum OXY, and McKesson MCK.

Below is a chart illustrating the share performance of all three companies with the S&P 500 blended in as a benchmark.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Let’s take a deeper dive into each company.

Occidental Petroleum

One of Buffett’s most famous buys of 2022, Occidental Petroleum OXY, is an integrated oil and gas company with significant exploration and production exposure. OXY is a Zacks Rank #3 (Hold) with an overall VGM Score of an A.

As expected, analysts have been bullish across all timeframes over the last 60 days, with earnings estimates rising substantially.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

OXY’s bottom-line is projected to skyrocket; the Zacks Consensus EPS Estimate for the company’s current fiscal year (FY22) sits at $11.00, penciling in a massive 330% Y/Y uptick.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

In addition, OXY has picked up strong momentum as of late, surpassing both bottom and top-line estimates in each of its previous four quarters. Below is a chart illustrating the company’s revenue on a quarterly basis.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

McKesson

Located in Texas, McKesson MCK is a healthcare services and information technology company operating through two segments: Distribution Solutions and Technology Solutions. MCK is a Zacks Rank #2 (Buy) with an overall VGM Score of a B.

Similar to OXY, analysts have been bullish in their earnings outlook over the last several months, raising estimates significantly.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

McKesson has been on a blazing earnings streak – the company has impressively exceeded revenue and earnings estimates in nine of its previous ten prints. Just in its latest release, MCK penciled in a 10% bottom-line beat and a 5% revenue beat.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Further, McKesson shares trade at solid valuation levels, further bolstered by its Style Score of an A for Value.

MCK’s 14.9X forward earnings multiple is nicely below its Zacks Sector average of 20.9X, representing a steep 29% relative discount.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Apple

One of the most popular stocks, Apple AAPL, has revolutionized the mobile phone landscape with its legendary iPhone and has pushed technology to new heights. AAPL is a Zacks Rank #3 (Hold) with an overall VGM Score of a B.

Apple has been the definition of consistency within its quarterly results – AAPL has exceeded revenue and earnings estimates in 19 of its previous 20 quarterly reports.

Just in its latest print, Apple recorded a 5.3% EPS beat and a 1.2% revenue beat.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

In addition, Apple is the undisputed king of free cash flow; AAPL is on track to achieve the highest free cash flow of any S&P 500 company in 2022.

Free cash flow was reported at a spectacular $20.8 billion in its latest quarter, good enough for a solid 9.4% uptick from year-ago quarterly free cash flow of $19 billion.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Even in the face of a harsh macroeconomic backdrop, AAPL is still forecasted to grow at an impressive pace – earnings are forecasted to grow 9% in FY22 and an additional 6% in FY23.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Bottom Line

It’s no secret that it’s been rough sailing in the market in 2022. A hawkish Fed has been a primary reason for the rough waters, with geopolitical issues causing a storm of their own.

In rough times, it can be beneficial to see what other high-profile investors have targeted, such as Warren Buffett.

All three stocks above – Occidental Petroleum OXY, Apple AAPL, and McKesson MCK – have seen buying activity from the Oracle of Omaha.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Apple Inc. (AAPL) : Free Stock Analysis Report
 
Occidental Petroleum Corporation (OXY) : Free Stock Analysis Report
 
McKesson Corporation (MCK) : Free Stock Analysis Report
 
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