Kelvin Hill April 3, 2024
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Chevron
For the better part of six decades, Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) CEO Warren Buffett has been lapping the benchmark S&P 500. Whereas the S&P 500 has gained a little over 34,300%, including dividends, since he became CEO of Berkshire in the mid-1960s, the Class A shares (BRK.A) of the Oracle of Omaha’s company have gained over 5,086,000%, as of the closing bell on March 27!
Warren Buffett’s “secret” to success is really no secret at all. He and his investment team seek out predominantly brand-name, profitable businesses with rock-solid management teams and allow time to work its magic.
What follows are three Warren Buffett stocks that are screaming buys in April, and have the potential to deliver for investors for a long time to come.
Sirius XM Holdings
The second Warren Buffett stock you can confidently add to your portfolio for April (and beyond) is energy company Chevron (NYSE: CVX). This integrated oil and gas giant happens to be one of only two holdings in Berkshire’s investment portfolio that Buffett and his team added to during the December-ended quarter.
If there’s a negative that comes with investing in oil stocks, it’s that they’re cyclical. In other words, they ebb-and-flow with the health of the U.S. economy. As we witnessed during the initial stages of COVID-19 lockdowns, the demand cliff can wallop the underlying commodities these businesses rely on. Thankfully, an assortment of macro and company-specific factors suggest Chevron is well-positioned for success.Paramount Global
The third Warren Buffett stock that stands out as a screaming buy in April, and likely well beyond, is media titan Paramount Global (NASDAQ: PARA).
The are two culprits behind the abysmal performance of Paramount’s stock. First, it’s suffering from the same advertising concerns holding down Sirius XM. The traditional TV divisions for legacy media operators like Paramount Global are still fairly reliant on advertising revenue.
The other concern for Paramount Global is the company’s debt. With advertising sales declining and movie productions being hit-and-miss following the pandemic, there’s been some concern about the company’s ability to service the $14.6 billion in long-term debt it had outstanding at the end of 2023.
While these are tangible concerns that have rightly weighed on Paramount’s stock, the risk-versus-reward now favors investors with a long-term mindset.
One factor working in Paramount’s favor is that we’re in an election year. According to GroupM, political ad spending in the U.S. is expected to grow by 31% to $15.9 billion this year from the previous election cycle (2020). While this may not be a cure-all for Paramount’s legacy TV segment, it’ll provide a nice lift following a difficult period for many ad-driven businesses.
Paramount’s streaming segment provides reason for optimism, too. Though investors would prefer to see substantially smaller losses in the current year, what’s important is Paramount has maintained strong subscription pricing power. Being able to increase prices without losing many (if any) of its 67.5 million Paramount+ subscribers is this segment’s key to turning the corner to recurring profits.
I’d be remiss if I didn’t also note that Paramount is behind the nation’s leading free, ad-driven streaming platform, Pluto TV. If the U.S. economy were to fall into a recession, “free” becomes an incredibly enticing option for consumers looking to save money.
Patient investors can pile into this Buffett stock right now for less than 9 times forward-year earnings, which may prove to be one heck of a bargain.
Should you invest $1,000 in Chevron right now?
3 Warren Buffett Stocks That Are Screaming Buys in April (and Beyond) was originally published by The Motley Fool
