For immediate release
Chicago, IL – July 13, 2022 – Today’s Zacks Investment Ideas feature highlights Apple AAPL, Occidental Petroleum OXY and HP HPQ.
INVESTMENT IDEAS #1
Imitate Warren Buffett’s 2022 strategy with these 3 stocks
Warren Buffett, also known as the Oracle of Omaha, is a common name that comes to mind when thinking of the financial world. He is one of the most followed individuals in the business, and for good reason – he has reaped stellar returns on the market.
Buffett is a philanthropist and businessman. He is the CEO of Berkshire Hathaway, a diversified holding company with subsidiaries involved in insurance, rail freight, power generation and distribution, manufacturing and many others.
Investors are still looking to see his next move.
He’s been on the offensive throughout 2022, no doubt recognizing value in areas, and that’s what we’re here to look at today.
Three stocks he bought in 2022 include Apple, Occidental Petroleum and HP. The chart below illustrates the year-to-date price movement of the shares of the three companies while incorporating the S&P 500.
Let’s take a closer look at each company to see if they fit your investing style as well.
Apple, creator of the legendary iPhone, has taken the mobile landscape to new heights. Buffett says he likes the tech titan because of his customers’ brand loyalty; consumers are likely to trade in old Apple products for new ones.
Rising more than 325% over the past five years, Apple shares have easily crushed the performance of the general market.
Apple is known for its consistent quarterly results – in its last 20 quarters, the creator of the iPhone has exceeded upper and lower estimates an impressive 19 times. In its most recent quarter, the company electrified the market and reported EPS of $1.52, posting a respectable 6% pace in the face of unfavorable trading conditions.
Apple’s forward P/E ratio currently sits at 23.8X, slightly above its five-year median value of 20.6X, but far from 2020 highs of 41.5X. , the stock is trading at a 12% premium to its Zacks sector.
While the forward earnings multiple is higher, the stock is actually trading at its lowest level since the start of 2020. AAPL has a value style score of C.
For the current fiscal year (FY22), the EPS estimate of $6.10 represents a notable 9% year-over-year net income expansion. Additionally, annual revenue is expected to climb to $394 billion, reflecting a respectable 8% year-over-year increase.
Texas-based Occidental Petroleum is an integrated oil and gas company with significant exploration and production exposure. Buffett bought OXY shares aggressively, signaling a substantial bet on the energy sector.
Occidental Petroleum shares struggled mostly throughout 2019 and most of 2020, stuck in a deep downtrend. The stock bottomed around November 2020, and since then investors have been on a parabolic run.
The company has recently found some consistency in its quarterly reports, beating both revenue and net income estimates in its past three quarters. In its most recent quarter, OXY beat the Zacks Consensus EPS estimate of $1.97 by nearly 8% and reported quarterly EPS of $2.12.
OXY’s futures price-to-sales ratio currently sits at 1.5X, a bit pricey compared to its Zacks sector average of 0.7X. However, the value is below its five-year median of 1.6X and a fraction of its peak of 4.5X in 2018.
The company sports a style score of an A for value.
Now here’s where things get interesting. The company has undoubtedly benefited from soaring energy costs, and the bottom and top end estimates reflect this.
For the current fiscal year (FY22), Zacks Consensus’ $10.53 estimate calls for strong triple-digit earnings growth of more than 310% year-over-year. Revenue growth is also noteworthy – the revenue estimate of $37 billion for FY22 marks a 40% increase in revenue over the prior year.
HP is a leading provider of personal computers and other consumer access devices worldwide. Buying looks like a classic Buffett value play.
Over the past five years, HP shares have climbed triple digits by 102%, significantly outperforming the S&P 500.
HP has shown impressive consistency in its quarterly reports, beating earnings expectations in 13 consecutive quarters since 2019. Additionally, the company has exceeded quarterly revenue estimates in eight of its last ten. quarters.
The PC giant has a beautifully low forward earnings multiple of 7.3X, well below its five-year median of 9.2X and well below 2017 highs of 13.4X. are trading at a staggering 66% discount to its Zacks sector.
HP boasts a style score of an A for value.
For the current fiscal year (FY22), the EPS estimate of $4.31 represents strong double-digit earnings growth of 14% year-over-year. Revenue also appears to remain strong, with the revenue estimate of $66 billion reflecting a 4% year-over-year revenue expansion.
It’s no secret why the Oracle of Omaha has garnered such a large following in the financial world. He reaped immense returns in the market, prompting investors to emulate his holdings.
In a quick change of events, Buffett has been on the offensive throughout 2022, and the three stocks above are all he has bought.
For those looking to invest like Buffett did in 2022, these three companies would be a great place to start.
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Past performance is not indicative of future results. The potential for loss is inherent in any investment. This document is provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold any security. No recommendation or advice is given as to whether any investment is suitable for any particular investor. It should not be assumed that investments in the securities, companies, sectors or markets identified and described have been or will be profitable. All information is current as of the date hereof and is subject to change without notice. The views or opinions expressed may not reflect those of the company as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management of securities. These returns come from hypothetical portfolios composed of stocks with Zacks Rank = 1 that have been rebalanced monthly without transaction fees. These are not the returns of actual stock portfolios. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor more information on the performance figures displayed in this press release.
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It’s a little-known chemical company that’s up 65% year-on-year, but still very cheap. With relentless demand, rising earnings estimates for 2022 and $1.5 billion for stock buybacks, retail investors could jump in at any moment.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.