What is Warren Buffett's favorite stock to buy right now (other than Berkshire Hathaway)?

Many investors (including me) have observed that Warren Buffett has accumulated a huge cash pile Berkshire Hathaway (BRK.A -0.25%) (BRK.B 0.03%). Many have also noticed that Buffett has been a net seller of stocks for seven quarters in a row.

Does this mean the legendary investor can no longer find stocks he likes? Not at all. Buffett doesn't buy many stocks, but he still buys some. What is Buffett's favorite stock to buy right now (other than Berkshire Hathaway)?

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The top contenders

I excluded Berkshire Hathaway myself because it appears to be the case always Buffett's favorite stock. In the first half of 2024 alone, he approved share buybacks worth $2.9 billion. Last year, Buffett made the company buy back shares worth a whopping $9.2 billion.

Apple could be considered a top contender for Buffett's favorite stock. After all, it is by far the largest holding in Berkshire's portfolio. At Berkshire's annual shareholder meeting earlier this year, Buffett said Apple was “an even better company” than Coca-Colawhich he described as “a wonderful business.” However, I don't think Apple is Buffett's favorite stock right now, for one simple reason: He sold a large portion of Berkshire's shares in the iPhone maker in the second quarter of 2024.

What about Berkshire's only new positions opened in the second quarter? Heico And Ulta Beauty? I'm not sure whether Buffett was the leader in purchasing these stocks or whether one of Berkshire's two investment managers made the decision. The size of the purchases of these stocks (around $185 million for Heico and $266 million for Ulta) is also relatively small for Berkshire. For these reasons, I don't think Heico or Ulta are Buffett's favorite stocks right now.

Sirius XM Holdings (SIRI 0.11%) however, seems to be a more promising candidate. Buffett added to the stock in the second quarter, increasing Berkshire's stake in the satellite entertainment provider more than eightfold. He also bought more stock in Sirius XM this month.

Buffett's favorite stock at the moment

Is Sirius XM Buffett's favorite stock right now? Perhaps. However, I think there can be even stronger arguments Occidental Petroleum (OXY 0.90%).

Berkshire has invested much more money in Occidental than in Sirius XM. Oxy is the conglomerate's sixth-largest position. Berkshire's stake in the oil and gas producer is worth $13.2 billion, about 4.4 times its position in Sirius XM.

More importantly, Buffett has bought Occidental more times than any other stock (except Berkshire Hathaway itself) in recent years. Since the start of 2022, there haven't been many quarters in which Buffett hasn't added to Berkshire's position in Oxy.

Could this buying trend soon come to an abrupt end? I do not believe that. In August 2022, Berkshire received regulatory approval to acquire up to 50% of Occidental. It currently owns 27.3% of the company.

Occidental is also one of eight stocks that Buffett mentioned in his latest letter to Berkshire shareholders and that he said he expects to hold “indefinitely.” Sirius XM was not on the list. Buffett praised Occidental's management. He wrote that he liked Oxy's “vast oil and gas reserves in the United States.” Buffett also noted that he likes Berkshire's option to “substantially increase our stake at a fixed price” via stock warrants.

Should you also buy Oxy stock?

I think the evidence suggests that Occidental Petroleum is Buffett's favorite stock right now. But should you buy Oxy stock? In my opinion it depends on your investing style.

Income investors probably won't be too excited about Occidental's expected dividend yield of just 1.7%. Other oil stocks offer significantly higher dividends.

Growth investors can undoubtedly find more attractive alternatives in the technology sector. However, don't discount Occidental's growth prospects. CEO Vicki Hollub predicts an oil shortage by the end of 2025. If she's right, Occidental's stock price could be poised for big gains in the not-too-distant future.

The company is also a leader in carbon capture and storage. If this technology realizes its potential, Occidental could achieve exceptional long-term growth.

Finally, I suspect that many value investors will love this stock. Occidental shares trade at 11.1 times forward earnings. This is significantly below that S&P 500 The energy sector's average forward earnings multiple is 13.9, which compares favorably to other S&P 500 sectors.

Buffett's favorite stock is not my favorite stock right now. However, for many investors who are not billionaires, it seems like a good idea to consider.