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Most investors dream of buying one stock that provides them with life-changing returns. A few stocks have set their investors up for life. For example, a $1,000 investment in Warren Buffett's Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) 45 years ago would be worth a staggering $2.7 million today. That's life-changing money for most people.
A key to Buffett's success in turning Berkshire into a wealth-creating machine has been investing in wonderful companies at fair prices. One stock Buffett and his team love is Occidental Petroleum (NYSE: OXY). Here's a look at whether the oil stock can follow in Berkshire's footsteps and set its investors up for life.
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A top Buffett stock
Occidental Petroleum is one of Berkshire's top holdings. Buffett's company owns nearly 265 million shares of the oil giant, or a full 28.2% of its outstanding shares, worth $10.5 billion. That's its sixth largest holding, at 4% of its investment portfolio.
Buffett wrote in his 2024 shareholder letter that he sees Occidental Petroleum as a forever holding, along with the likes of Coca-Cola and American Express. He highlighted three factors driving this view in that letter:
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Its vast oil and gas resources in the United States.
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Its leadership in carbon capture initiatives.
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The strength of its management team, led by CEO Vicki Hollub.
Multiple catalysts to grow shareholder value
Occidental Petroleum holds a treasure trove of low-cost oil and gas resources across the United States. The company has drilling rights on 9.3 million net acres in the Rockies, Permian Basin, and Gulf of Mexico (also known as the Gulf of America in the United States). These resources should enable Occidental Petroleum to continue growing its production for many years to come.
The biggest question is how long oil and gas will remain the dominant fuel sources, given growing climate change concerns. If demand continues to increase and prices remain high enough, Occidental's vast oil and gas business should be able to continue growing shareholder value.
Occidental Petroleum is working hard to help lessen the environmental impact of oil and gas by investing heavily in carbon capture and sequestration (CCS). The company is building the world's largest direct air capture facility to suck carbon dioxide out of the air and sequester it underground. It sees the potential to build many of these facilities and the associated underground storage hubs in the future.