Warren Buffett's 3 Secrets to Value Investing

• (0:30) - Where Can Value Investors Find Investments Right Now?
• (5:40) - Tracey’s Top Stock Picks For Your Portfolio
• (29:00) - Episode Roundup: BRK.B, BAC, COP, OXY, OZK, CMWAY
•                 [email protected]

3 Key Takeaways

1. Buffett has 3 secrets to investing: patience, conviction and a strong stomach.
2. Do you have the patience to invest in energy and banks right now?
3. Banks like Bank of America and Bank OZK are cheap and have rising earnings.

Welcome to Episode #409 of the Value Investor Podcast.

Every week, Tracey Ryniec, the editor of Zacks Value Investor portfolio, shares some of her top value investing tips and stock picks.

Recently, on X, Tracey saw a quote from a retired oil executive discussing how “painful” it has been investing in oil stocks, especially with the Magnificent 7 near all-time highs.

But he believed that the energy market would eventually rebalance.

Until then, however, he said you had to have “patience, conviction and a strong stomach.”

These are the attributes of a value investor. Warren Buffett, the CEO of Berkshire Hathaway and long considered to be the greatest value investor ever, is often described as having these same attributes, especially patience.

However, it’s easier said than done.

Are you willing to have patience to own stocks in the hated industries like energy and banks?

5 Stocks for Value Investors in 2025

1. Berkshire Hathaway (BRK.B)

Berkshire Hathaway hit a new high earlier in the year but over the last month, shares have struggled. Berkshire Hathaway is down 4.7% in that period while other large caps are breaking out.

It remains an expensive stock. Berkshire Hathaway trades with a forward P/E of 23.6 and has a PEG ratio of 3.4. A P/E under 15 usually indicates a value stock.

Is this weakness a buying opportunity in Berkshire Hathaway, or not?

2. Occidental Petroleum Corp. (OXY)

Occidental Petroleum is a large oil company and a member of the Berkshire Hathaway equity portfolio. Buffett has been steadily buying shares of Occidental the last few years.

Shares of Occidental Petroleum have fallen 14% year-to-date and 32.3% over the last year as oil prices have tumbled. The earnings outlook is not good in the energy sector. Occidental is expected to see a 36% decline in earnings this year. This will be the third year in a row of declining earnings.

Occidental trades with a forward P/E of 18.8.

Is this a buying opportunity in Occidental Petroleum?

3. Bank of America Corp. (BAC)

Bank of America is one of the largest banks in the United States. It’s in the Berkshire Hathaway equity portfolio. Shares of Bank of America are up 7.1% year-to-date and are eyeing 5-year highs.

Earnings are expected to rise 12.5% in 2025 and 16.3% in 2026. Bank of America also pays a dividend, yielding 2.2%.

Buffett has mostly abandoned the banks in recent years even as the earnings outlook has improved.

Should Bank of America be on your short list?

4. Bank OZK (OZK)

Bank OZK is a regional bank which specializes in real estate. It gives development loans. Bank OZK has a market cap of $5.7 billion. It’s paying a dividend, yielding 3.6%.

While earnings are expected to fall 3.3% in 2025, they are forecast to rebound 11.1% in 2026. Shares of Bank OZK are up 5.4% year-to-date but have been stuck in a trading range the last 4 years.

It’s cheap. Bank OZK trades with a price-to-book (P/B) ratio of just 0.98. Bank analysts recommend buying a bank at 1.0 and selling it when the P/B ratio reaches 2.0.

Should value investors put Bank OZK on their watch list?

5. Commonwealth Bank of Australia (CMWAY)

Commonwealth Bank of Australia is a large cap bank with several business segments including insurance, commercial and personal lending, and wealth management. It is based in Australia with a market cap of $202 billion.

Shares of Commonwealth Bank of Australia are breaking out to new 5-year highs. It’s up 26.5% year-to-date.

Earnings are expected to rise 7.8% in 2025 and another 2.5% in 2026. But the shares are not cheap anymore. Commonwealth Bank of Australia trades with a forward P/E of 31. It pays a dividend, yielding 2.2%.

Commonwealth Bank of Australia is a Zacks Rank #1 (Strong Buy). There are currently 16 Strong Buy foreign banks. What’s going on with foreign banks?

Should value investors consider a foreign bank like Commonwealth Bank of Australia?

What Else Should You Know About Buffett’s Secrets?     

Tune into this week’s podcast to find out.

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This article originally published on Zacks Investment Research (zacks.com).

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