Election Day Looms: Two Warren Buffett Stocks Poised for Big Gains
With only two days left until the highly anticipated elections, the fate of millions of Americans hangs in the balance. The outcome will undoubtedly have a significant impact on the stock market, with some companies set to thrive while others may struggle. One investor who remains unfazed by the uncertainty is Warren Buffett, whose Berkshire Hathaway portfolio is poised to benefit regardless of the election’s outcome.
Oil Stocks Take Center Stage
Two of Berkshire’s largest holdings, Chevron (NYSE: CVX) and Occidental Petroleum (NYSE: OXY), are oil giants that could reap significant rewards if the Republicans secure a majority in Congress and Donald Trump wins a second term. Chevron, Berkshire’s fifth-largest holding, is valued at around $17.7 billion, while Occidental Petroleum, in sixth place, is worth approximately $13.2 billion.
Buffett’s Betting on Occidental
While Buffett has reduced his stake in Chevron in recent quarters, he has continued to aggressively invest in Occidental Petroleum. Berkshire now owns 27.3% of the company and has obtained regulatory approval to acquire up to 50% of its shares. This strategic move could pay off handsomely if the Republicans implement policies favorable to the oil and gas industry.
GOP Policies Could Boost Oil Stocks
Two key Republican policies could have a significant impact on Chevron and Occidental Petroleum. Firstly, Trump’s pledge to increase domestic drilling for oil and gas could lead to deregulation, which would be a welcome development for oil executives and investors alike. Secondly, his plan to reduce corporate tax rates from 21% to 15% could significantly boost the bottom lines of both companies.
Election Uncertainty Remains
Despite forecasts suggesting a strong likelihood of a Republican sweep, the outcome of the election remains far from certain. Decision Desk HQ, a website that tracks U.S. election results, estimates that Trump has a 54% chance of winning the presidential race, but notes that the margins are slim and the odds of a GOP sweep are only around 1 in 5.
A Democrat Victory: What’s Next for Oil Stocks?
If the Democrats emerge victorious, it’s unlikely that Chevron and Occidental Petroleum stocks will experience a significant surge. However, neither is a major sell-off expected, as demand for oil and gas will continue to drive growth. Additionally, both companies are investing in carbon capture and storage technology, which could yield long-term benefits regardless of the political landscape.
Investing in the Future
Before investing in Chevron or Occidental Petroleum, it’s essential to consider the broader market landscape. The Motley Fool’s Stock Advisor team has identified what they believe are the 10 best stocks for investors to buy now, and Chevron didn’t make the cut. These top-performing stocks have the potential to generate substantial returns in the coming years.
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