2 Warren Buffett Stocks to Buy Hand Over Fist and 1 to Avoid

Warren Buffett plans to step down as the CEO of Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) by the end of this year, and many people are wondering if his successor, Greg Abel, will be able to maintain the legendary investor's track record as the top manager of the conglomerate's stock portfolio.

But instead of wondering if Abel can fill Buffett's massive shoes as a stock picker, investors should look back at Buffett's top long-term picks for Berkshire. Let's take a look at two of those classic picks that are still worth buying -- and one that we should avoid.

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Berkshire Hathaway CEO Warren Buffett. Image source: The Motley Fool.

Buy Moody's

Moody's (NYSE: MCO) is one of the largest financial data and analytics companies in America. It provides a wide range of financial data, credit rating, and analytics services, and many of the world's top companies, financial institutions, and investors rely on its data to help them make key financial decisions. It shares a near-duopoly in this market with S&P Global.

That business model makes Moody's an evergreen play that can flourish during both bull and bear markets. From 2014 to 2024, its EPS increased at a compound annual rate of 9% -- even though elevated interest rates throttled the growth of its credit ratings business (by curbing the market's appetite for fresh debt offerings) in 2022 and 2023. It also bought back nearly 12% of its shares over the past 10 years, and its dividend has a forward yield of 0.8% at the current stock price.

From 2024 to 2027, analysts expect its EPS to grow at a compound annual rate of 12%. Trading at 37 times expected forward earnings, the stock isn't a bargain, but it should remain an attractive safe haven play in this wobbly market. Berkshire Hathaway hasn't sold any shares of Moody's since 2013, and its $12 billion position gives it a 13.7% stake in Moody's and accounts for 4.2% of Berkshire's equity portfolio.

Buy VeriSign

VeriSign (NASDAQ: VRSN) operates the domain name registries for the internet's two most popular top-level domains: .com and .net. It's also the top subcontractor for the .edu and .jobs domains. It sells those domain names to registrars -- like GoDaddy and Network Solutions -- which then sell them to businesses, organizations, governments, and individuals. So as long as those customers keep registering and renewing their websites under those domains, VeriSign's revenue and profits will keep rising.

From 2014 to 2024, its year-end .com and .net registrations rose from 130.6 million to 169 million as its renewal percentage rate stayed in the low 70s. It also renewed its two .com agreements with the U.S. government for another six years last August, even as both deals were closely scrutinized by politicians and advocacy groups. It bought back 29% of its shares over the past decade, and its dividend has a forward yield of 1.1% at the current stock price.

From 2024 to 2027, analysts expect VeriSign's EPS to grow at a compound annual rate of 10%. Trading at 32 times forward earnings, it's not cheap either, but its core business is built to last through bull and bear markets. Berkshire's 14.2% stake in VeriSign is worth about $3.7 billion and accounts for 1.3% of the conglomerate's portfolio. Berkshire actually accumulated more shares in it throughout 2024 and 2025, even as it pruned many of its top positions.

Avoid Occidental Petroleum (for now)

Berkshire Hathaway's $11.6 billion position in the oil and natural gas producer Occidental Petroleum (NYSE: OXY), also known as Oxy, gives it a 26.9% stake in the company and accounts for 4.1% of its stock portfolio. It has consistently increased that position over the past three years. Buffett likes Oxy as a domestic energy play that helps reduce America's dependence on foreign oil, but it has lost nearly 30% of its value over the past 12 months as crude oil prices sank.

Oxy is primarily an upstream company -- it engages in the exploration, drilling, and extraction of oil and natural gas. So when energy prices rise, its revenue growth outpaces its spending and its margins expand. But when those prices drop, its revenue growth decelerates and its margins contract.

Inflation, higher interest rates, soaring tariffs, and trade wars have all chilled the global economy, driving down the total demand for oil and causing price declines. Moreover, OPEC+ has boosted its crude oil output amid that slowdown, adding to downward pressure on oil prices, while U.S. companies reduced their domestic drilling activity in response to those macro challenges.

Oxy has increased its number of outstanding shares by 28% over the past decade to fund its acquisitions (including Anadarko Petroleum in 2019 and CrownRock in 2023) and cover its conversions of warrants and convertible debt. On the bright side, analysts expect its EPS to grow at a compound annual rate of 14% from 2024 to 2027 as the fossil fuel market stabilizes. At the current share price, its dividend yields 2.2%, and the company seems reasonably valued at 19 times forward earnings. So while Oxy might eventually recover, I'd avoid it until crude prices stabilize.

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Leo Sun has positions in Berkshire Hathaway. The Motley Fool has positions in and recommends Berkshire Hathaway, Moody's, S&P Global, and VeriSign. The Motley Fool recommends GoDaddy and Occidental Petroleum. The Motley Fool has a disclosure policy.