Warren Buffett, best known as Oracle of Omaha, is one of the world’s most successful investors with a net worth of $118 billion. Buffett follows a long-term value investing strategy, focusing on stocks with prices considerably lower than their intrinsic values.
Buffett is currently the chairman and CEO of a diversified holding company, Berkshire Hathaway (BRK.A) (BRK.B). Berkshire releases its 13F filing every quarter, which shows what stocks the company has purchased and sold during the three months.
Berkshire took advantage of the market’s second-quarter swoon to increase its current position in some stocks. After subtracting sales, Berkshire spent approximately $3.8 billion buying stocks during the second quarter.
While Buffett’s Berkshire bought more shares of McKesson Corporation (MCK), Chevron Corporation (CVX), Occidental Petroleum Corporation (OXY), and Activision Blizzard, Inc. (ATVI) during the quarter, are these stocks good investments for retail investors right now? Let’s discuss.
McKesson Corporation (MCK)
MCK offers healthcare supply chain management, community oncology and specialty care, retail pharmacy, and healthcare information solutions in the United States and internationally. The company operates through four segments: U.S. Pharmaceutical; International; Medical-Surgical Solutions; and Prescription Technology Solutions.
Buffett’s Berkshire owns 3.2 million shares of MCK, a 2.2% stake in the company.
On July 22, MCK’s Board of Directors declared a regular dividend of $0.54 per share of common stock, an increase of 15% from $0.47 per share in the previous quarter. It will be payable on October 3. The company has increased its dividend for six consecutive years.
“This dividend increase demonstrates our continued commitment to returning capital to shareholders as part of our disciplined capital allocation framework. It exemplifies the strength of our consistent cash flow generation and reflects our confidence in the long-term trajectory of the business,” said Brian Tyler, MCK’s CEO.
On June 23, MCK and HCA Healthcare, Inc. (HCA) announced an agreement to form a joint venture leveraging MCK’s US Oncology Research (USOR) and HCA’s Sarah Cannon Research Institute (SCRI). The joint venture is expected to offer an expanded clinical research network, a portfolio of clinical trials, and enhanced data and analytics capabilities to improve cancer treatment options.
MCK’s revenues increased 7.2% year-over-year to $67.15 billion in the fiscal 2023 first quarter ended June 30, 2022. Income from continuing operations attributable to MCK came in at $766 million, up 56.7% year-over-year. Its adjusted earnings per share grew 4.9% year-over-year to $5.83. In addition, net cash provided by investing activities improved 139.4% from the year-ago value to $39 million.
Analysts expect MCK’s revenue for the fiscal year 2023 (ending March 2023) to come in at $276.24 billion, representing a 4.7% rise year-over-year. Also, Street expects the company’s EPS for the current quarter to come in at $24.25, representing a 2.4% increase year-over-year. It’s no surprise that the company has surpassed the consensus revenue estimates in each of the trailing four quarters.
MCK’s shares have gained 32% over the past six months and 46.3% year-to-date to close the last trading session at $363.02.
MCK’s POWR Ratings reflect this promising outlook. The stock has an overall rating of A, which equates to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
MCK has a grade of A for Growth. It has a B grade for Value, Stability, and Sentiment. It is ranked #1 of 82 stocks in the Medical – Services industry.
Click here to see MCK’s POWR Ratings for Momentum and Quality.
Chevron Corporation (CVX)
CVX engages in integrated energy and chemical operations worldwide. The company operates through two segments: Upstream; and Downstream. The Upstream segment is involved in the exploration, production, transportation, storage, and marketing of crude oil and natural gas. Its Downstream segment is engaged in refining crude oil into petroleum products and marketing crude oil, renewable fuels, and refined products.
Buffett’s Berkshire Hathaway holds more than 163.5 million shares of CVX. This represents a nearly 8.4% stake in the company.
This month, CVX’s subsidiary, Chevron U.S.A. Inc., and Brightmark Fund Holdings LLC, a subsidiary of Brightmark LLC, the global waste solutions provider, delivered the first gas at its Athena Project in Minnehaha County, South Dakota. The project is a part of their previously announced partnership to own project companies across the United States to produce and market renewable natural gas (RNG).
With this partnership, CVX might promote its sustainability goals and support its commitment to meeting customers’ growing demand for lower carbon fuel solutions.
For the fiscal 2022 second quarter ended June 30, 2022, CVX’s total revenues and other income increased 82.9% year-over-year to $68.76 billion. Its income before income tax expense came in at $16 billion, up 261.9% year-over-year. The company’s net income grew 278.6% year-over-year to $11.72 billion, while net income attributable to CVS stood at $5.95, up 271.9% year-over-year.
The consensus revenue estimate of $238.15 billion for the fiscal year 2022, ending December 2022, represents an increase of 46.6% from the previous year. The $19.06 consensus EPS estimate for the ongoing year indicates a 134.4% year-over-year rise. However, the company’s revenue and EPS for the next year are expected to decline by 9.8% and 12.6% year-over-year, respectively.
CVX’s shares have gained 38% year-to-date and 67.3% over the past year to close the last trading session at $164.63.
CVX’s overall C rating equates to a Neutral in our proprietary POWR Ratings system. The stock has an A grade for Momentum and a B for Quality. It has a grade of C for Growth, Sentiment, and Stability and an F for Value.
Within the B-rated Energy-Oil & Gas industry, the stock is ranked #66 of 97 stocks.
Click here to get access to POWR Ratings for CVX.
Occidental Petroleum Corporation (OXY)
OXY engages in the acquisition, exploration, and development of oil and gas properties in the United States, the Middle East, Africa, and Latin America. The company operates through three segments: Oil and Gas; Chemical; and Midstream and Marketing. It develops, processes, transports, stores, and markets oil and condensate, natural gas liquids (NGLs), and natural gas.
Buffett’s Berkshire holds 188.4 million shares of OXY, a 20.2% stake in the company.
On August 25, OXY’s subsidiary, 1PointFive, announced to begin detailed engineering and early site construction for their large-scale Direct Air Capture (DAC) plant in Ector County, Texas. The plant might advance large-scale carbon capture to help OXY and others reduce emissions and accelerate their respective paths to net zero.
Also, the captured carbon could be securely sequestered in saline formations or used to produce low-carbon products.
OXY’s net sales increased 79.2% year-over-year to $10.68 billion in the fiscal 2022 second quarter ended June 30, 2022. Its income from continuing operations rose 3,655% from the prior-year period to $3.76 billion. The company’s adjusted income and earnings per share came in at $3.44 billion and $3.16, up 573.2% and 887.5%, year-over-year, respectively.
However, OXY’s cash and cash equivalents stood at $1.36 billion, down 70.2% year-over-year. Also, the company’s total assets declined 7.2% from the year-ago value to $74.22 billion.
Analysts expect OXY’s revenue and EPS for the fiscal year 2022 (ending December 2022) to grow 40.2% and 320.6% year-over-year to $36.90 billion and $10.72, respectively. However, the company’s revenue and EPS for the next year are expected to decline 11.9% and 23% year-over-year, respectively.
The stock has gained 72.1% over the past six months and 142.3% year-to-date to close the last trading session at $75.26.
OXY has an overall rating of C, which translates to a Neutral in our proprietary rating system. It has a grade of A for Momentum and a B for Growth and Quality. The stock has a C grade for Value and a D for Stability and Sentiment. Within the B-rated Energy-Oil & Gas industry, it is ranked #48 of 97 stocks.
To access POWR Ratings for OXY, click here.
Activision Blizzard, Inc. (ATVI)
ATVI develops and publishes interactive entertainment content and services in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. The company operates through three segments: Activision; Blizzard; and King. It maintains a proprietary online gaming service, Battle.net, and runs export leagues.
Buffett’s Berkshire Hathaway owns 68.4 million shares of ATVI, an 8.7% stake in the company.
In July, Blizzard entertainment closed the acquisition of Boston-based studio Proletariat to better serve players in the multiplayer online role-playing game, World of Warcraft. This acquisition is expected to expand the company’s development resources as it invests in the growth of key franchises.
As of June 30, 2022, ATVI’s cash and cash equivalents amounted to $10.48 billion, compared to $10.42 billion as of December 31, 2021. However, the company’s revenues decreased 28.4% year-over-year to $1.64 billion in the fiscal 2022 second quarter ended June 30, 2022. Furthermore, its net income and earnings per common share came in at $280 million and $0.36, down 68% and 67.9% year-over-year.
The $3.16 billion consensus revenue estimate for the fiscal 2022 fourth quarter, ending December 2022, represents a 27% improvement from the same period in 2021. Analysts expect ATVI’s EPS for the same quarter to increase 17.3% year-over-year to $0.51. However, analysts expect the company’s revenue and EPS to decline by 3.6% and 23.7% year-over-year, respectively.
The stock has gained 16.8% year-to-date to close the last trading session at $78.75. However, it has declined 3.4% over the past six months.
ATVI’s overall C rating equates to a Neutral in our proprietary POWR Ratings system. The stock has a B grade for Quality. It has a grade of C for Value and Stability and a D for Growth, Momentum, and Sentiment.
Within the C-rated Entertainment-Toys & Video Games industry, it is ranked #13 of 22 stocks.
Click here to get access to POWR Ratings for ATVI.
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CVX shares were trading at $159.70 per share on Tuesday morning, down $4.93 (-2.99%). Year-to-date, CVX has gained 39.91%, versus a -15.63% rise in the benchmark S&P 500 index during the same period.
About the Author: Mangeet Kaur Bouns
Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions. More...
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|ATVI||Get Rating||Get Rating||Get Rating|
|MCK||Get Rating||Get Rating||Get Rating|