Stock picks

Stock picks

Warren Buffett has been a favorite celebrity among stock investors for decades. The longtime value investor has been uncanny with his ability to make smart investment picks, and that's been a big part of what's made the Omaha native one of the richest people in the world. Even Buffett hasn't been immune from the coronavirus market downturn, as many of his holdings have lost a great deal of value. Yet as any good value investor knows, looking for great companies when their share prices have gotten beaten down can lead to finding some of your most successful stock picks ever. Here, we'll look at the many Buffett stocks that find themselves at bargain prices now -- and then pick a favorite from the cream of the crop.

Stock Picks

Few industries have been harder-hit than the oil business this year. In the U. It's so bad that at one point this past week, U. And it looks like it could be a long time before much of the industry can recover. Oil prices are only part of the problem; the bigger problem is a lack of storage for all the extra oil that's still being pumped by producers slow to respond to the collapse in demand.

And while this ugly scenario means most oil stocks should be avoided, there are still some high-quality businesses to be found. Four Fool. Jason Hall Phillips 66 : Independent oil producers and the companies they employ to work in the oilfields are facing a world of hurt. As a result, any company that makes a living in the oilfields will take it hardest , and will be the last to benefit from the eventual recovery in oil demand. Phillips 66, however, is able to avoid most of this pain: It doesn't produce any oil, since the split that made it a stand-alone refining, marketing, pipeline, and petrochemicals business -- in short, everything upstream of the oil wells.

The company buys the oil that it uses, and that should help insulate it from some not all, but some of the impact of falling oil prices in its refining operation. Yes, it will feel the severe pinch from falling demand for gasoline and jet fuel , but its natural gas businesses, its pipelines, and its petrochemicals manufacturing should prove much stronger and more resilient than its oil-related segments.

Next, it has a management team that's proven excellent at navigating energy cycles, making sure the company has the cash it needs to ride out a prolonged downturn in fuel demand.

Put that together, and Phillips 66 has the benefits of being an integrated major, without the albatross of being an oil producer. A wave of bankruptcies, which has already started , will likely flow over the industry in the coming months. That will keep the pressure on energy stocks. However, while financially weaker companies won't survive this downturn, several built their businesses to endure the market's inevitable ups and downs. One of those durable companies is TC Energy. The Canadian pipeline giant has several characteristics that put it in a solid position to survive the market meltdown and thrive once conditions improve.

Meanwhile, most of its customers have investment-grade credit ratings , which increases the probability that they'll have the funds to keep paying TC Energy. The company complements that solid cash flow profile with one of the highest credit ratings among its pipeline-operating peers.

Thanks to those factors, TC Energy should have the financial flexibility to maintain its dividend -- which currently yields 5. Its current slate of projects has it on track to grow its cash flow at a mid-single-digit pace for the next several years. While TC Energy isn't immune to this downturn, it's better prepared to navigate through the challenges thanks to its conservative financial profile. That makes it one of the few energy stocks to consider buying during these dark days.

Travis Hoium Casey's General Stores : There aren't many parts of the oil industry that I would touch right now as an investor. Oil producers are in trouble now that oil is bouncing around zero. That will affect service companies, pipelines, refiners, tankers, and much more of the supply chain. What low oil prices may actually help long-term is the demand for gasoline at the pump. And that's why my pick is gas-station operator Casey's General Stores. But if we look out a year or two, I think demand will return as people hit the road at more normal levels.

Consumption of oil may not be what it was in , but it'll be higher than it is today, and that means Casey's General Stores will be busy again. Casey's markets -- generally small Midwestern towns -- should also be less affected than those of competitors in larger cities. More workers in the company's markets will be considered essential farmers, healthcare workers, and factory workers and are less likely to be able to work from home, so the company may not be as hampered by COVID as many oil companies in the U.

The stock isn't cheap, trading at 25 times trailing earnings, but at this point, it's worth paying a high earnings multiple for a company with the kind of stability that Casey's provides. Investors were especially caught off guard by Monday's drop in U.

With that in mind, I'm recommending shares of French oil major Total. Like its big oil peers, it's been hit hard this year, with a share price that's fallen Also, Total has the least exposure to U.

Data source: Company press releases. Total's U. So if the company decides to simply exit the U. Conversely, if it decides to stick around, the drain on its finances will be minimal by comparison.

I'm not sure the oil and gas industry is going to be a particularly good place to put your money in the coming months, but Total's low U. Apr 24, at PM. A Fool since , he began contributing to Fool. Trying to invest better? Like learning about companies with great or really bad stories? Jason can usually be found there, cutting through the noise and trying to get to the heart of the story.

Image source: Getty Images. Company Percentage of Liquids Production from U. Chevron Stock Advisor launched in February of Join Stock Advisor.

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Few industries have been harder-hit than the oil business this year. In the U. It's so bad that at one point this past week, U. And it looks like it could be a long time before much of the industry can recover. Oil prices are only part of the problem; the bigger problem is a lack of storage for all the extra oil that's still being pumped by producers slow to respond to the collapse in demand. And while this ugly scenario means most oil stocks should be avoided, there are still some high-quality businesses to be found. Four Fool. Jason Hall Phillips 66 : Independent oil producers and the companies they employ to work in the oilfields are facing a world of hurt.

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Oil Crash 2020: 4 Top Oil-Stock Picks

You may have read stories about investment strategies tailored for down markets that have succeeded as the bull market in stocks ended this year. Buffalo Funds is based in Mission, Kan. Carlsen has been a portfolio manager of the Buffalo Discovery Fund since January and is now its sole manager. The fund picks investments based on stock selection. Carlsen and his team will look out five to seven years and establish best-case and worst-case scenarios with price-target ranges. The broad indexes are down significantly, as you can see in the table below. The online-pet-food service, which provides all sorts of other pet supplies, is an obvious beneficiary of the COVID lockdown. The primary driver is people are pampering their pets more than ever. That means eventually less revenue on towers that had rented space to both companies. You can see the dramatic decline resulting from the customer data security breach disclosed in September Following a difficult period of elevated legal costs and efforts to rebuild its brand, Carlsen believes the worst is behind Equifax. ESG stands for environmental, social and governance. Ecolab also makes the supplies used by its cleaning equipment, which means an annuity stream from most customers. However, there is a long-term opportunity, as these and other industries focus even more on hygiene after the coronavirus restrictions are lifted.

This Dirt-Cheap Warren Buffett Stock Should Be Your Top Pick Right Now

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