Going into the fourth quarter of 2024, Warren Buffett had been a net seller of stocks for eight consecutive quarters. The streak has now increased to nine after Berkshire Hathaway disclosed its Q4 holdings.
However, Buffett didn't only sell stocks in the latest quarter. The legendary investor bought six stocks in Q4, and one stands out as the best of the bunch.
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All the stocks Buffett bought in Q4
Buffett initiated a new position in only one stock in Q4, buying 5.62 million shares of Constellation Brands (NYSE:STZ). The company is best known for its premium beers, including Corona and Modelo. Constellation also markets wine and spirits and owns a large stake in Canadian cannabis producer Canopy Growth.
Perhaps the least surprising move for Buffett in Q4 was the purchase of additional shares in Occidental Petroleum (NYSE:OXY). Berkshire has steadily increased its stake in the oil and gas company in recent years.
SiriusXM Holdings (NASDAQ:SIRI) also appears to have become one of Buffett's favorite stocks. Berkshire added 2.31 million shares of the satellite radio operator in Q4.
Previous regulatory filings revealed that Buffett bought more shares of Verisign (NASDAQ:VRSN) in Q4 even before Berkshire's latest disclosure of its holdings. Berkshire now ranks as the largest shareholder of the domain registry services and internet-infrastructure company, with a 14% stake worth over $3 billion at the end of 2024.
Last but not least, Buffett continued to build his position in two stocks first purchased last year. He bought another 1.1 million shares of Dominos Pizza (NASDAQ:DPZ), increasing Berkshire's stake in the pizza company by roughly 86.5%. Buffett also boosted Berkshire's position in swimming pool products distributor Pool Corp. (NASDAQ:POOL) by around 48%.
How these stocks compare
SiriusXM is the only mid-cap stock among Buffett's Q4 purchases. All of the others are large-cap stocks, with Occidental's market cap of $45 billion ranking it as the largest of the group.
Most of the stocks Buffett bought in Q4 have been big losers for investors over the last 12 months with double-digit percentage declines. Domino's and Verisign are the outliers -- both stocks are up, although they're still lagging behind the S&P 500.
Buffett remains a value investor at heart. However, three of the stocks bought in Q4 aren't especially cheap. Domino's Pizza, Pool, and Verisign trade at between 26x to 29x forward earnings. It's possible (and perhaps even probable) that one of Berkshire's two investment managers, Todd Combs and Ted Weschler, made the calls to buy these stocks.
The other three purchases, though, sport much more reasonable valuations. Occidental's forward earnings multiple of 13.1 is lower than the energy sector average and well below the S&P 500 average. Constellation Brands' shares trade at only 10.9x forward earnings. SiriusXM is arguably the biggest bargain with its forward earnings multiple of around 8.9.
Dividends aren't Buffett's primary consideration in buying a stock, but he still likes to receive them. SiriusXM is the top dividend stock of the group, with a forward dividend yield of 3.98%. Constellation's yield of 2.48% isn't too shabby, either. All of the other stocks pay yields between 1% and 2%, except for Verisign, which doesn't have a dividend program.
The best of the bunch
On paper, SiriusXM might seem to be the best of the six stocks Buffett bought in Q4. It has the lowest forward earnings multiple and offers the highest dividend yield. Buffett's newest addition, Constellation, could look like a strong second-place stock, based on these criteria.
However, I think it's appropriate to consider what Buffett himself thinks. He has built a much larger stake in Occidental than any of the other stocks purchased in Q4. Oxy ranks as Berkshire's seventh-largest holding. Also, in his 2023 letter to Berkshire shareholders, Buffett included Occidental among the handful of stocks he intended to "maintain indefinitely." None of the other stocks bought in Q4 were on his list.
Buffett will likely continue buying Occidental in 2025. While the performance of the stock this year will be largely dependent on oil prices, I think the "Oracle of Omaha" is right about its long-term prospects. I suspect if we asked Buffett which of the six stocks is the best of the bunch, his answer would be Oxy. Based on all factors, I'd agree.
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Keith Speights has positions in Berkshire Hathaway. The Motley Fool has positions in and recommends Berkshire Hathaway, Domino's Pizza, and VeriSign. The Motley Fool recommends Constellation Brands and Occidental Petroleum. The Motley Fool has a disclosure policy.
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