In this piece, we will take a look at Billionaire Prem Watsa’s 10 Stock Picks With Highest Potential.
Momentum and technology stocks have dominated the markets over the past decade. They have been the catalyst behind valuations in the overall equity markets getting out of hand. Not anymore. A full-blown correction is in play, going by major US indices pulling back by up to 10% from all-time highs. The pullback has mostly been felt in the tech space, where most counters have been trading at premium valuations for years.
The correction being experienced comes on the backdrop of billionaire investor Prem Watsa insisting that value investing has been overshadowed over the past decade. The renowned investor and CEO of Fairfax Financial Holdings insists on patience and discipline in value investing as one of the ways of generating long-term returns.
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“In the last 10 years since that 2008, 2009 crash—call it the great financial crash—value investing basically, I think, one, maybe two years we’ve had that value-oriented stocks have done well compared to momentum.”
The dominance of technology stocks led by the “magnificent seven” stocks has tested the resolve of value-focused investors in recent years. The stocks have posted double-digit percentage gains over the past two years, resulting in premium valuations at the back of the artificial intelligence-driven rally. However, the stocks have come under pressure in 2025 amid a string of headwinds, among them the growing concerns about the impact of the US trade war.
Growing concerns that the US Federal Reserve will not cut interest rates as inflation ticks high on the pitfalls of the US trade war and tariffs have also sent tech stocks tumbling the most. With the stocks pulling back, billionaire Watsa insists that now may be the best time to look for value investments, trading at highly discounted valuations with significant upside potential.
For Watsa, the Canadian “Warren Buffett”, focus should always be on value investing, focusing on strong businesses at fair prices.
“We just think value investing—where you’re buying something, a dollar for 50 cents, is the expression—good companies run by good, honest, hardworking presidents, CEOs. And you’re buying them at fair prices. We think over time that should work.”
Watsa has built a reputation for identifying and focusing on undervalued opportunities. He has also cemented his place as one of the most respected figures in global finance with a reputation for navigating crises, such as the one in play amid the US trade war. Fairfax Financial Holdings, the holding company that Watsa founded in 1985, has carved a name over its disciplined underwriting and value-oriented investment strategy. It also focuses on delivering above-average returns over time. With a portfolio value of about $1.5 billion, the holding company portfolio is highly diversified across basic materials technology financials and consumer cyclical sectors.
Our Methodology
We combed Fairfax Financial Holdings Limited SEC Q4 2024 13F filings to identify Billionaire Prem Watsa’s 10 stock picks with highest potential. We then settled on stocks with more than 30% upside potential based on analysts ratings and analyzed why the stocks stand out as solid value investments well poised to generate significant value. Finally, we ranked the stocks in ascending order based on the value of the stock’s upside potential after highlighting hedge fund sentiment on the stocks.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Billionaire Prem Watsa’s 10 Stock Picks With Highest Potential
10. Occidental Petroleum Corporation (NYSE:OXY)
Number of Hedge Fund Holders: 68
Fairfax Financial Holdings’ Stake: $297.47 Million
Analysts’ Upside Potential as of April 21: 32.16%
Occidental Petroleum Corporation (NYSE:OXY) is an independent energy company that engages in acquiring, exploring, and developing oil and gas properties. It also operates a chemical manufacturing subsidiary. It is one of the billionaire Prem Watsa stocks with the highest potential in the energy sector. While the stock is down by about 20% year to date, analysts on Wall Street believe it has a 32% upside potential.
On April 15, research firm Stephens reiterated an Overweight rating on Occidental Petroleum Corporation (NYSE:OXY) but cut the price target to $58 from $60. The price cut comes from the overall energy sector coming under pressure on oil prices plunging below $70 a barrel. Nevertheless, Occidental Petroleum Corporation boasts of a significant presence in the Permian Basin, which should allow it to shrug off the low oil prices.
On April 9, the company reiterated that it would deliver solid Q1 2025 results as it received higher-than-expected oil and gas prices. Occidental Petroleum Corporation (NYSE:OXY) received an average price of $71.07 per barrel, higher than the $69.73 per barrel received in the last quarter of 2024. In addition, it boasts a well-diversified core business with operations in chemical and midstream infrastructure. Amid the turmoil in the energy sector, Occidental maintains a strong dividend track record, having made payments for 52 consecutive years with a current yield of 2.66%.
9. Garrett Motion Inc. (NASDAQ:GTX)
Number of Hedge Fund Holders: 32
Fairfax Financial Holdings’ Stake: $2.75 Million
Analysts’ Upside Potential as of April 21: 35.21%
Garrett Motion Inc. (NASDAQ:GTX) is an auto parts company that designs, manufactures, and sells turbocharging, air and fluid compression, and high-speed electric motor technologies for original equipment manufacturers and distributors. It also offers cutting-edge technology for mobility and industrial space.
BWS Financial has already reiterated a Strong Buy rating on the stock with a $12 price tag. The bullish stance comes on the heels of the automotive technology provider announcing plans to return 75% or more of its adjusted free cash flow to shareholders through stock buybacks and dividends. The actions affirm the strength of the balance sheet and confidence in generating long-term free cash flow.
Garrett Motion Inc. (NASDAQ:GTX) delivered full-year 2024 results. While revenue was down 11% year-over-year to $3.4 billion, adjusted EBITDA improved by 90 basis points to 17.2%. The company also generated $358 million in adjusted free cash flow, a testament to solid operating performance. Amid a challenging market environment, Garrett Motion Inc. (NASDAQ:GTX) is increasingly capitalizing on the growing demand for zero-emission technologies. It has already inked a strategic partnership with SinoTruk to enhance the development of commercial electric vehicles. The two are working on developing a next-generation electric powertrain with a focus on the robust Chinese commercial vehicle market.