"Our favorite holding period is forever."-Warren Buffett

Buying stocks for the long term is a great way to build wealth. By owning the stocks of fantastic companies with competitive advantages, modest investments can grow exponentially.

So, let's dig deeper and have a closer look at two Buffett stocks that might fit the bill: AmericanExpress(NYSE: AXP) and OccidentalPetroleum(NYSE: OXY).

Image source: The Motley Fool.

1. American Express

American Express is a longtime BerkshireHathaway holding, and it's no wonder: It's one of the most iconic brands in America. While the company is mainly a payments processor, similar to Visa and Mastercard, American Express stands out from the competition in a variety of ways, including:

1. Premium brand status: American Express is considered a luxury brand in the credit card industry. It caters more to businesses and upper-income individuals. As a result, its customer base tends to spend at higher rates than its competitors.
2. Higher merchant fees: On average, American Express charges merchant transaction fees between 2.5% to 3.5%. Meanwhile, Visa and Mastercard charge between 1.5% to 2.5%. American Express can afford to charge the higher rate, since many merchants highly desire its customer base.
3. Renowned customer service: Growing up, my father always raved about customer service at American Express. Times may have changed, but American Express still ranks high in customer service. Even in the digital era, phenomenal customer service matters.

In summary, American Express has an iconic brand and several competitive advantages -- making it an excellent Buffett-owned stock to consider.

2. Occidental Petroleum

It's crystal clear that Warren Buffett and Berkshire Hathaway can't get enough of Occidental Petroleum. Since first started making open-market purchases in Occidental back in the first quarter of 2022, Berkshire's position in the energy giant has grown to over $12 billion. It makes up roughly 4% of the Berkshire portfolio and is its seventh-largest stock holding.

The company's main advantages are clear:

1. Fossil fuels remain essential: While renewable energy may threaten the dominance of fossil fuels in the long term, they remain a critical component of today's energy playbook. Occidental's vast reserves of oil and gas -- many located within the rich Permian Basin -- will be needed for years to come.
2. Improving balance sheet: Occidental took on massive debt following its acquisition of Anadarko Petroleum in 2019. However, last year's rally in oil prices drove tremendous cash flow for Occidental. It recorded $12.6 billion of free cash flow in 2022. That influx of cash helped it retire debt, bringing its net debt to $18 billion -- a reduction of more than 57% from its peak in 2019.
3. Modest valuation: With a P/E ratio of only 4.6, Occidental is cheap, even within the energy sector. Competitors like Chevron (8.3), ConocoPhillips (6.5), and EOGResources (7.8) sport higher P/E ratios. Granted, part of the reason why is that Occidental is more exposed to changes in oil and natural gas prices. When prices fall, it will see a larger drop in net income and free cash flow than many of its competitors.

Nevertheless, Occidental's fossil fuel reserves remain a key part of the energy future, its overall financial health is improving, and its stock remains reasonably priced. It's no surprise Berkshire keeps buying more of the company's stock.

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American Express is an advertising partner of The Ascent, a Motley Fool company. Jake Lerch has positions in EOG Resources and Visa. The Motley Fool has positions in and recommends Berkshire Hathaway, EOG Resources, Mastercard, and Visa. The Motley Fool recommends the following options: long January 2025 $370 calls on Mastercard and short January 2025 $380 calls on Mastercard. The Motley Fool has a disclosure policy.