Pay attention to the potential of the stock that Warren Buffett just bought

  • Pay attention to the stock that Warren Buffett bought this June, because it is also trading at an attractive price and has attractive potential.
  • We will see 3 sectors that the market likes and 1 that may go through problems with the issue of tariffs.
  • We have to see how the theme of the Magnificent 7 has changed from 2023 to 2024, we would have to look for another name.
  • The marijuana sector, six years in which it has gone from being the star to nothing.
  • Do you want to invest taking advantage of market opportunities? Don’t hesitate! Try InvestingPro! Subscribe HERE AND NOW for less than 9 euros per month and get almost 40% off for a limited time on your 1-year plan!

Ranking of the main stock exchanges in 2024

This is how the main stock markets are doing so far this year:

  • 17.74%
  • Japanese 15.99%
  • S&P 500 13.78%
  • 8.81%
  • Italian Eb 7.62%
  • German 7.46%
  • 7.03%
  • British Ftse 5.35%
  • Chinese CSI 3.22%
  • 2.36%
  • French -0.53%

Investor Sentiment (AAII)

Bullish sentiment, that is, expectations that stock prices will rise in the next six months, increased 5.6 percentage points to 44.6% and remains above its historical average of 37.5%.

Bearish sentiment, that is, expectations that stock prices will fall over the next six months, fell 6.3 percentage points to 25.7% and is below its historical average of 31%.

3 good sectors and 1 in danger

S&P 500

The S&P 500 is up 13.9% in the first 114 trading days of the year. This means it is its best start to an election year in its history. The previous record was from 1961 when it rose 13.5%. On that occasion it rose 8.4% for the rest of the year. The second record was from 1945 with 13.3% and the rest of the year 15.3%.

As a curious fact, it took 757 days to rise from 4800 to 4900 points, while it only took 140 days to go from 4900 to 5400 points.

On Wall Street, optimism for equities remains fully in force. In addition to the good corporate results that are expected, we are approaching the interest rate cut by the Fed after the ECB has moved ahead. The most popular sectors are technology, industry, healthcare and travel-leisure.

On the other hand, the sector that may be in the eye of the storm is the automotive sector in Europe, since raising tariffs to 48% on the importance of Chinese electric cars raises fears that they will respond in kind. In that case, three companies are the most affected: Volkswagen (ETR:), BMW (ETR:) and Mercedes Benz.

A ring to govern them all

Magnificent Seven ETF (Roundhill Magnificent Seven ETF)

The Magnificent 7 (Microsoft (NASDAQ:), Apple (NASDAQ:), Nvidia (NASDAQ:), Amazon (NASDAQ:), Meta (NASDAQ:), Tesla (NASDAQ:), Alphabet (NASDAQ:)) are a shadow of what they were last year. In 2023 they were responsible for 62% of the 26.3% rise in the S&P 500 and all 7 rose, the most Nvidia with 239.02% and the least Apple with 49%. The one that contributed the most to the rise of the S&P 500 was Microsoft with 13.28% and Nvidia supported with 11.04%.

But this year is different. So far this year, Nvidia has risen the most with 121.39% but not all of them are in the green, Tesla has fallen -28.33%. Furthermore, the one that is contributing the most to the rise of the S&P 500 is Nvidia with 32.26%.

That is, in 2024 the Magnificent 7 could perfectly be called The Magnificent, because Nvidia is enough on its own to push the S&P 500 up.

By the way, if we look at the last 30 years, we also have Nvidia as the stock with the highest profitability, 279292%, followed by Amazon 235154%, Monster Beverage (NASDAQ:) 199269%, NVR 109625%, Apple 88542%, Biogen ( NASDAQ:) 62414% and Netflix (NASDAQ:) 59506%.

Warren Buffett buys back shares of Occidental Petroleum (NYSE:)

Occidental Petroleum -

Occidental Petroleum

Warren Buffett has a special predilection for the shares of Occidental Petroleum, a company dedicated to energy exploration and production, with activities in the United States, Latin America and the Middle East.

In fact, it has just bought shares again, specifically 1,750,308 shares worth approximately $105.5 million. The operation took place over three days (June 10, 11 and 12).

With this operation, the American company represents 4.6% of Buffett’s portfolio, who now owns almost 28.5% of the energy company, a figure that makes him the largest shareholder by far. The energy sector, particularly oil and gas, has been an area of ​​interest for Buffett, and these recent acquisitions underscore his commitment to this investment.

At the end of the first quarter, Occidental Petroleum was the sixth largest company in Buffett’s portfolio. In first place is Apple with 40.8%, followed by Bank of America (NYSE:), with 11.8%, American Express (NYSE:) with 10.4%, Coca-Cola (NYSE:) ) with 7.4% and Chevron (NYSE:) with 5.9%.

The reality is that it likes to generate a lot of cash flow and buy back shares. Exceeded first quarter expectations with record production and significant cost reductions. It also plans to improve cash flow by more than $1 billion and is focused on strengthening its balance sheet. On July 31, it presents its accounts.

Its fair value based on fundamentals is 13.8% above its closing price on Friday, specifically at $68.08, and the market gives it an average potential of $71.96.

The reality of the marijuana sector

The marijuana sector has not yet taken off. Everything indicated that its moment began when Canada legalized its recreational use in 2018 and when several states in the USA made progress in that regard. But things have not gone as expected.

Canopy Growth was once worth $25 billion and now stands at $800 million. Tilray Brands went from $10 billion to $1.5 billion.

Curaleaf shares have fallen -73% from their highs. Those of Trulieve Cannabis, Green Thumb Industries and Verano Holdings fall -82%, -66% and -84% respectively from 2021.

The famous AdvisorShares Pure US Cannabis ETF, the largest and most relevant, sinks -82% from its highs.

AdvisorShares Pure US Cannabis ETF

AdvisorShares Pure US Cannabis ETF

The reality is that in Canada and the US states where it is legal, sales and production are subject to tough regulations, which increases costs. On the other hand, the illegal market does not have to pay taxes or comply with regulations, thus filling the market with low-priced marijuana. Of course, those who comply with the law have no choice but to lower their prices if they want to compete.

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