Warren Buffett Just Bought 7 Stocks. These Are The Best Of The Group For Value Investors.

Warren Buffett was mentored by Benjamin Graham, the father of value investing. It is no surprise then that Buffett carefully scrutinized the valuations of every stock he bought during his long and successful career.

Can value investors today find solid investment ideas in the stocks Buffett is buying? I think so. The legendary investor bought seven stocks in the second quarter of 2024. Here’s the best of the bunch for value investors.

Buffett’s Q2 Purchases

Buffett took new positions in just two stocks in Q2, buying 1.04 million shares of an aerospace and electronics company Heico (NYSE: HEI) for Berkshire Hathaway‘S (NYSE: BRK.A) (NYSE: BRK.B) portfolio. He also bought more than 690,000 shares of cosmetics retailer Ulta Beauty (NASDAQ: ULTA).

The most anticipated transaction for Buffett in the second quarter was likely his purchase of an additional 7.26 million shares of Occidental petroleum (NYSE: OXY)The oil stock is Berkshire’s sixth-largest holding. Buffett said in his letter to Berkshire Hathaway shareholders earlier this year that he expects to own a stake in Occidental “indefinitely.”

Another purchase for Buffett in Q2 shouldn’t come as a surprise either. He increased Berkshire’s position in Fatty (NYSE: CB) by nearly 4.3%, adding 1.11 million shares of the major insurer. After taking a position in Chubb last year, it is now Berkshire’s ninth-largest holding.

Buffett’s other three purchases in Q2 have a common denominator. He bought 2.43 million shares of Liberty SiriusXM Group Class A (NASDAQ: LSXMA) and 4.52 million shares of Liberty SiriusXM Group Class C (NASDAQ: LSXMK)Both shares reflected Liberty Media’s interest in Sirius XM Holdings (NASDAQ: SIRI)Just to be sure, Buffett also bought 96.2 million shares of Sirius XM itself, increasing Berkshire’s stake in the satellite radio and podcast company by more than 262%.

Several stocks that investors may find interesting

I think value investors will like some of the stocks Buffett bought in Q2. In fact, Heico is the only stock we can easily cross off the list. The stock trades at a sky-high forward price-to-earnings ratio of 61.3.

Ulta Beauty may be too expensive for some value investors. However, its forward earnings multiple of 16.3 isn’t bad. That’s especially true when you consider that the S&P 500 currently trades at 21.5 times forward earnings.

But value investors should feel good about Buffett’s other Q2 purchases. Sirius XM trades at a fraction under 12 times forward earnings. Chubb’s forward earnings multiple is 11.9.

The story continues

Occidental Petroleum is even cheaper, trading at 11 times forward earnings. The fact that Berkshire Hathaway has received regulatory approval to acquire up to 50% of the company, leaving it with just 27.3% of Oxy, should give value investors even more confidence in the stock.

The best of the bunch

For value investors, the best result from Buffett’s second-quarter purchases would have been a tie between Liberty SiriusXM Group Class A and Liberty SiriusXM Group Class C. As of Sept. 9, 2024, both stocks traded at just over 6.5 times forward earnings.

Note the use of the past tense in the above statement. Neither stock is for sale anymore. Last week, a merger between Sirius XM Holdings and Liberty SiriusXM Group was completed, along with an accompanying 1-for-10 reverse stock split. With Liberty SiriusXM Group stock out of the fray, Occidental remains the easy pick as the best of the bunch for value investors.

If you want another reason to buy Oxy besides a cheap valuation, consider the company’s investment in direct air capture, a type of carbon capture that sucks carbon dioxide out of the air. If this technology is successful, Occidental Petroleum could be a huge winner in the years to come.

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Keith Speights has positions in Berkshire Hathaway and Chubb. The Motley Fool has positions in and recommends Berkshire Hathaway and Ulta Beauty. The Motley Fool recommends Heico and Occidental Petroleum. The Motley Fool has a disclosure policy.

Warren Buffett Just Bought 7 Stocks. These Are the Best of the Bunch for Value Investors. was originally published by The Motley Fool