🤖📈 Top Trade Ideas for July 24

Warren Buffett has been consistently purchasing stock in Occidental Petroleum and now owns roughly 25% of the business. Even with all of Buffett’s public purchases, the stock is still within 10% of the average amount he has paid. The author aims to understand what Buffett might be seeing in the company. Occidental Petroleum is an energy company with three main operating segments: oil and gas, chemical and midstream, and marketing. The oil and gas segment is the main driver of the business, accounting for 82% of profits in 2022. Occidental has a significant presence in key US geographies, owning over 9.5 million acres in the US, with about 8.5 million acres onshore. The company made a transformative acquisition of Anadarko in 2019, which bolstered its position in the Permian and reduced its dependence on international markets. However, the acquisition was ill-timed, causing financial strain for Occidental. The stock has since recovered and is currently at $60, with a repaired balance sheet and a capital return program in place. The author believes that value is accruing to common shareholders of Occidental Petroleum. Occidental is considered a low-cost producer with assets well positioned in a politically stable environment. The company has shown effective capital allocation and a commitment to returning value to shareholders. However, the stock's current market valuation suggests that the market disagrees with these positive attributes. The future returns of Occidental will be driven by factors such as growth, yield, and change in valuation multiple, with the price of oil significantly impacting earnings.

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The author believes that PENN Entertainment, Inc. (NASDAQ:PENN) is an undervalued stock that the market has not recognized. The company has experienced a recovery in revenues in the US geography, thanks to the return of older demographics and the legalization of sports betting. The acquisition of Barstool Sports media business and the launch of Barstool Sports book have contributed to PENN's success. PENN is showing mediocre sales growth and has been impacted by litigation settlements. The company aims to become the most friction-free casino/digital gaming operator by implementing innovative tech solutions. PENN is expanding beyond casinos and sports betting to enter the sports media business. It’s currently priced at book value and the author believes that is a product of performance prior to the more positive trends that first appeared in 1Q23 and are expected to be sustained for the rest of the year. The company has a strong balance sheet and a 1-year target of $36 for PENN's stock. The author expects positive trends to continue and believes PENN has a high margin of safety.

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Teladoc stock saw a 10% increase after announcing an expanded partnership with Microsoft to integrate AI tools into its telehealth platform. This collaboration is seen as significant for Teladoc's position in the telehealth industry. However, the stock has since given up its gains. The partnership aims to automate clinical documentation during virtual patient exams and reduce clinicians' administrative workloads. Teladoc is expected to beat revenue estimates in its upcoming Q2 2023 report, and its revenue estimates for 2023 have been raised slightly. The stock is considered undervalued and has the potential for significant growth. However, it has remained rangebound and may need to break out of its current range to see further gains. Teladoc's data advantage and partnership with Microsoft-Nuance make it an attractive bet on AI in the healthcare industry. It is rated as a \"Strong Buy\" and is considered a compelling long-term buy.

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