Warren Buffett can't remember any period since his first stock purchase on March 11, 1942, that he hasn't had a majority of his net worth in U.S. stocks. That's what he recently wrote to Berkshire Hathaway shareholders, adding, "And so far, so good."
The multibillionaire continues to own many great stocks that other investors should like, too. But some of them especially stand out. Here are three Buffett stocks to buy hand over fist in March.
1. Amazon
Buffett didn't make the initial call to buy Amazon(NASDAQ: AMZN). One of his two investment managers initiated Berkshire's position in the e-commerce and cloud services company in 2019. However, Buffett has been a longtime admirer of Amazon and expressed regret that he hadn't bought the stock sooner.
In several ways, Amazon is even more attractive now than it was when Berkshire first bought the stock. For example, the company is arguably now focused on boosting profitability and free cash flow more than it has ever been.
Its efforts on this front are bearing fruit. The company's earnings jumped to $10.6 billion in the fourth quarter of 2023 from only $300 million in the prior-year period.
Amazon generated free cash flow of $36.8 billion over the trailing 12 months ending Dec. 31, 2023, compared to an outflow of $11.6 billion over the trailing 12 months ending Dec. 31, 2022.
I'd argue that the company's prospects are better now, too. The rise of generative AI has made it more important than ever for organizations to move their apps and data to the cloud. As the leading cloud services provider, Amazon should benefit greatly from this trend.
2. Lennar
Berkshire exited its stake in one major U.S. homebuilder in the fourth quarter, but the conglomerate's portfolio still includes two homebuilders. I especially like Lennar(NYSE: LEN)(NYSE: LEN.B).
Buffett isn't as much of a value investor as he used to be. However, valuation remains an important factor in his buying decisions. Lennar looks dirt cheap, with its shares trading at a forward price-to-earnings ratio of only 10.
Such a low valuation wouldn't be appealing if the builder's prospects were dismal, but that's not the case. The U.S. continues to face a significant housing shortage, and the only solution to this challenge is to build more houses. As one of the largest homebuilders in the country, Lennar is well positioned to profit as new homes are constructed.
It just might have a catalyst on the way in the near term. The Federal Reserve has hinted that interest rate cuts are coming at some point in 2024. If and when the Fed cuts rates, mortgage rates should also fall. That could provide a nice boost to the housing market -- and to stocks like Lennar.
3. Occidental Petroleum
In his latest letter to Berkshire shareholders, Buffett listed Occidental Petroleum(NYSE: OXY) as one of the stocks that his company would probably own "indefinitely." It's also a stock that he will likely continue to buy aggressively.
Berkshire currently owns 28.2% of Occidental, up from 27.8% at the end of 2023. The conglomerate, though, has regulatory approval to acquire up to 50% of Oxy. Buffett noted in his recent shareholder letter that Berkshire's warrants give it the option "to materially increase our ownership" in Occidental over the next few years.
Why does Buffett like Occidental so much? First, he prizes the company's "vast oil and gas holdings" in the U.S. Second, he believes that Occidental is on the right track with its carbon capture initiatives.
I think the Oracle of Omaha is right on both counts. Oil prices are likely to rise in the future, boosting Occidental's share price. And although Oxy's direct air capture technology for removing carbon dioxide from the atmosphere remains unproven, it could be a huge moneymaker for the company down the road.
Should you invest $1,000 in Occidental Petroleum right now?
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Keith Speights has positions in Amazon and Berkshire Hathaway. The Motley Fool has positions in and recommends Amazon, Berkshire Hathaway, and Lennar. The Motley Fool recommends Occidental Petroleum. The Motley Fool has a disclosure policy.
