The Omaha Oracle is eyeing Chevron and Verizon.
Berkshire Hathaway, led by famous investor Warren Buffett, announced considerable stakes in these two legacy players earlier this week.
CNBC’s Trading Nation asked two brokers if they would follow their example and put money to work on those two stocks.
“It shows the challenge that Buffett has now in deploying capital. It’s such a huge amount that he needs to deploy, so he really has to find these big stable names. … They are not the typical American franchises that you would see him do, “Quint Tatro, president of Joule Financial, said on Wednesday.
Tatro said that while Verizon looks attractive as a dividend game, he prefers oil giant Chevron.
“This is a big name for integrated oil, one of the best names in the balance sheet type, 25% debt to equity, which is very, very good in that space,” he said. “It’s not his typical name, but we would probably prefer Chevron to Verizon.”
Berkshire Hathaway announced a $ 8.6 billion stake in Verizon and a $ 4.1 billion stake in Chevron. Both outperformed the market this week.
Todd Gordon, founder of TradingAnalysis.com, owns Chevron and Verizon, pointing out that both are high-yielding. Verizon has a dividend yield of 4.4% and Chevron close to 5.5%.
Chevron, in particular, is getting a boost from higher oil prices driven by rising demand and an energy squeeze in Texas during a winter storm. The stock rose more than 12% this month, while crude oil rose 17%. Gordon establishes a stock trade.
“If you want to spread options, here’s a little idea … maybe do a 95-105 call spread if you want to do it like this until June, as the markets are discounting the summer season and reopening “, he said.
A target of $ 105 implies a 10% increase for Chevron from current levels.
Disclosure: Gordon holds CVX and VZ in its value portfolio.
Disclaimer