3 Warren Buffett Stocks to Buy Hand Over Fist in January 2026

Berkshire Hathaway’s equity portfolio highlights three 2026 opportunities: Ally Financial, Chevron and Kraft Heinz. Berkshire holds 29 million Ally shares (9.4%, ≈$1.3bn); Ally shares rose ~30% in 2025 vs the S&P’s 16.4% and sell-side forecasts project EPS of $5.38 for 2026 versus $3.75 for 2025 (≈+44%), driven by normalizing auto-loan markets and wider NIMs. Chevron trades at ~20x forward P/E (vs Exxon ~16.9x) and faces headwinds from low oil and gas prices but could benefit from cost cuts, gas-fired power projects for AI data centers and a potential oil rebound; Kraft Heinz (Berkshire stake 27.5%, ≈$7.9bn) took a $5bn impairment but plans a 2026 spinoff to separate slower staple foods from faster-growing sauces/seasonings, with KHC trading at ~9.5x forward earnings versus peers in the mid-teens.

Analysis

Market structure: Ally (ALLY) is a direct beneficiary if auto-loan delinquencies stabilize and net interest margins (NIM) re-expand toward the consensus-driven EPS recovery ($3.75→$5.38); that implies a mid‑teens to mid‑$50s price target over 12–18 months. Chevron (CVX) is priced for a multi-year recovery (forward P/E ~20) that already embeds expectations for cost cuts and gas‑to‑power projects; oil/gas weakness today compresses near‑term cash flow but preserves upside optionality if WTI reclaims ~$80/bbl in 2027. Kraft Heinz (KHC) faces event‑driven upside from a planned spin; trading at ~9.5x forward EPS versus peers in the mid‑teens implies 25–50% potential re‑rating if the spin yields cleaner growth buckets.

Risk assessment: Near‑term tails include a consumer credit shock (auto defaults rising >150bps above baseline within 6 months), oil remaining structurally weak through 2027, or spin execution failure at KHC. Immediate (days) moves will be event‑driven (earnings, spin filings); short term (weeks–months) depends on macro (rates, used‑car prices); long term (quarters–years) hinges on NIM trajectory, commodity cycles, and M&A outcomes. Hidden dependencies: Ally’s recovery is levered to used‑car prices and dealer liquidity; CVX’s upside is contingent on successful gas‑to‑power ramp and capex discipline; KHC upside depends on clean break and capital allocation post‑spin.

Trade implications: Direct plays — establish a tactical 2–3% long in ALLY for 12–18 months to capture EPS normalisation, size to volatility and use a 20% stop. Use defined‑risk option exposure to CVX (1–2% notional) via 9–12 month call spreads to capture a commodity‑led rebound; add materially if WTI 30‑day MA > $80. Event strategy for KHC: small (1.5–2%) long pre‑spin with a 6–9 month protective put to cap downside while capturing re‑rating.

Contrarian angles: Consensus underestimates execution risk at KHC but overestimates permanent impairment — a successful spin can unlock value quickly; the market may be underpricing ALLY’s sensitivity to NIM widening (a 50–100bp NIM swing could move EPS >20%). Conversely, CVX’s premium to XOM implies idiosyncratic execution must justify the gap; if gas‑to‑power rollouts delay, downside vs peers will be meaningful. Historical parallel: post‑cycle auto lenders re‑rated sharply when credit normalized (12–24 months), suggesting patience plus defined risk is rewarded.

Key Decisions for Investors

• Establish a 2–3% long position in ALLY (NYSE: ALLY) sized to portfolio volatility for a 12–18 month horizon; set an initial stop-loss at 20% and plan to add up to +1% if consensus EPS for the next two quarters rises toward $4.75+ or NIM expands visibly.
• Allocate 1–2% notional to a defined‑risk CVX (NYSE: CVX) options trade: buy a 9–12 month call spread (caps downside) to capture a commodity rebound; increase exposure materially only if WTI 30‑day MA closes above $80/bbl.
• Take a 1.5–2% event‑driven long in KHC (NASDAQ: KHC) ahead of the planned spin this year, paired with a 6–9 month protective put to limit downside; target a 30–50% upside if post‑spin businesses re‑rate to mid‑teens P/E.
• If the energy complex trends higher (WTI > $75 for a 10‑day MA) or CPI surprises persist, reduce core fixed‑income duration by 0.5–1.0 years and rotate 1–2% into energy exposure (CVX or ETFs) to hedge inflation/commodity upside.