The Oracle of Omaha has set its sights on Chevron and Verizon.
Berkshire Hathaway, led by famed investor Warren Buffett, announced major stakes in these two legacy players earlier this week.
CNBC’s “Trading Nation” asked two traders if they would follow suit and put money into those two stocks.
“He talks about the challenge Buffett has right now in deploying capital. It’s such a massive amount that he has to deploy, so he has to find these big stable names … It’s not the typical American franchises you’d buy see it do.” said Quint Tatro, president of Joule Financial, on Wednesday.
Tatro said that while Verizon looks a bit appealing as a dividend game, it prefers oil giant Chevron.
“This is a major name in integrated oil, one of the best balance sheet type names, 25% equity debt, which is really good in this space,” he said. “It’s not their typical name type, but we’d probably favor the Chevron over Verizon.”
Berkshire Hathaway announced a $ 8.6 billion stake in Verizon and $ 4.1 billion in Chevron. Both have outperformed the market this week.
Todd Gordon, founder of TradingAnalysis.com, owns Chevron and Verizon, noting that both are high-performing. Verizon has a dividend yield of 4.4% and Chevron close to 5.5%.
Chevron, in particular, is receiving a boost from rising oil prices, driven by rising demand and energy pressure in Texas during a winter storm. Shares have risen more than 12% this month, while crude has risen 17%. Gordon establishes a stock trade.
“If you want to do an option deal, here’s a little idea … maybe do a 95-105 call deal if you want to do it that way in June, as the markets discount the summer driving season and the reopening, ”he said.
A $ 105 target implies a 10% increase for Chevron from its current levels.
Disclosure: Gordon has CLC and VZ in its value portfolio.
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