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Could Warren Buffett value this stock more than Apple because of the unique opportunity this stock presents?

Anyone familiar with Warren Buffett knows the famous investor enthusiasts Apple (NASDAQ: AAPL). He has called the company a better company than any other company Berkshire Hathaway‘s subsidiaries and better than old holding companies in Berkshire American Express And Coca-Cola.

However, another company is catching Buffett’s attention even more these days: Western petroleum (NYSE:OXY). Could Buffett like this stock more than Apple because of the once-in-a-generation opportunities?

Occidental’s unique opportunity

The company has been producing petroleum since 1920, and it’s been a long time since the oil sector presented investors with a huge new opportunity. But Occidental is investing billions of dollars in an emerging technology that could be a new once-in-a-generation source of wealth: carbon capture and storage (CCS).

As the name implies, CCS involves capturing carbon dioxide and storing it so that it does not affect the atmosphere. It has become a popular development area due to increasing concerns about the impact of carbon dioxide emissions on climate change.

Occidental focuses on direct air capture (DAC), a form of CCS that removes carbon dioxide from the air. Last year it acquired DAC pioneer Carbon Engineering for $1.1 billion. The company plans to build up to 135 DAC factories.

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What will Occidental do with all the carbon dioxide sucked from the air? President and CEO Vicki Hollub wants to use much of it for oil production. Her goal is to make oil “net-zero,” where the carbon dioxide captured from the atmosphere neutralizes the carbon dioxide emitted from burning the oil. The company has also started selling carbon credits to other companies.

ExxonMobil predicts that CCS will reach $4 trillion in sales by 2050, and Occidental is one of the leaders in this emerging market. If the company’s technology can be successfully scaled, Occidental could continue to produce oil for decades without worrying about climate impacts.

Does Buffett like Occidental more than Apple?

Buffett has expressed support for Occidental’s carbon capture initiatives. But does he really like Occidental more than Apple? There are at least two reasons to think so.

Most importantly, the legendary investor continues to aggressively buy shares of Occidental, but sold nearly 13% of Berkshire’s stake in Apple in the first quarter of 2024. Berkshire owns 28% of Occidental and has received regulatory approval to acquire up to 50% of the company. .

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In his latest letter to Berkshire shareholders, Buffett listed eight stocks that he expects Berkshire to “hold indefinitely.” Occidental was one of them, but Apple was not.

However, it’s easy to argue that Apple remains Buffett’s favorite stock. For starters, the tech giant still makes up 39.7% of Berkshire’s portfolio. That’s almost four times larger than the conglomerate’s second-largest holding company (bank of America) and almost 10x the size of his position in Occidental. Buffett also said at Berkshire’s recent shareholder meeting that Apple will likely continue to have the largest position.

Good choices for several reasons

Maybe Buffett likes Occidental more than Apple; maybe not. Either way, I think both companies are good choices for different reasons.

Carbon capture could be a truly unique opportunity for Occidental. I suspect the stock has significant upside potential, especially with Berkshire regularly buying additional shares.

Apple could be having another unique moment with artificial intelligence (AI). The company is widely expected to introduce multiple AI innovations at its Worldwide Developers’ Conference in June. I think it’s possible that Apple could enjoy another super cycle of iPhone upgrades in the coming years thanks to AI.

Should You Invest $1,000 in Occidental Petroleum Now?

Consider the following before purchasing shares in Occidental Petroleum:

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Bank of America is an advertising partner of The Ascent, a Motley Fool company. American Express is an advertising partner of The Ascent, a Motley Fool company. Keith Speights has positions at Apple, Bank of America, Berkshire Hathaway and ExxonMobil. The Motley Fool holds positions in and recommends Apple, Bank of America and Berkshire Hathaway. The Motley Fool recommends Occidental Petroleum. The Motley Fool has a disclosure policy.

Could Warren Buffett value this stock more than Apple because of the unique opportunity this stock presents? was originally published by The Motley Fool

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