Is It Too Late to Buy This Warren Buffett Stock That Has Soared in 2026?

Why It Matters

The stock’s rapid appreciation and improved balance sheet give Berkshire a high‑growth energy asset, while the forward valuation suggests upside for investors willing to tolerate commodity risk.

Key Takeaways

• Occidental up 37% YTD, now ~5% of Berkshire’s portfolio.
• 2025 free cash flow hit $4.3 billion, debt down to $15 billion.
• Record 2025 production: 1.434 million boe/d, exceeding guidance.
• Forward P/E 12.5 versus trailing P/E 42 suggests undervaluation.
• Buffett built stake since 2019; risk remains commodity price volatility.

Pulse Analysis

Berkshire Hathaway’s escalating stake in Occidental Petroleum reflects Warren Buffett’s long‑term confidence in energy assets that can thrive amid volatile commodity markets. The conglomerate first entered the deal in 2019 with preferred shares and warrants, later adding common stock each year through 2025. The recent $9.7 billion cash purchase of OxyChem not only stripped out a non‑core segment but also freed capital, allowing Occidental to sharpen its focus on oil and gas production while delivering a healthier balance sheet for Berkshire’s portfolio.

Occidental’s operational metrics underscore why the market has rewarded the stock. In 2025 the company posted a record 1.434 million barrels of oil equivalent per day, surpassing guidance and driving operating cash flow to $11.6 billion. After stripping out the chemicals division, free cash flow reached $4.3 billion, and debt was trimmed to $15 billion, a level many peers consider manageable. The firm also raised its quarterly dividend by 8%, signaling confidence in sustained cash generation despite the capital‑intensive nature of upstream drilling.

From a valuation standpoint, Occidental appears cheap relative to its earnings outlook. While the trailing P/E hovers around 42, the forward P/E of 12.5 suggests the market is pricing in a significant earnings upside as oil prices stay near $90‑$99 per barrel. However, investors must weigh the inherent volatility of commodity pricing and the $5.5‑$5.9 billion capital spend slated for 2026. Buffett’s early‑stage purchases locked in a wide margin of safety, making a modest allocation to Occidental a plausible play for those seeking exposure to energy growth without over‑leveraging risk.