Fortunes, they say, are made in bear markets. Of course, they're made in bull markets too. The difference is that many investors don't recognize the opportunities that major pullbacks provide.
But amid the current bear market, which stocks are the most attractive? Here are three that the world's smartest investors are buying hand over fist right now.
1. Occidental Petroleum
Warren Buffett certainly deserves a spot high on the list of the most successful investors of all time. The Oracle of Omaha loves to buy stocks during times of uncertainty. He has famously recommended: “Be fearful when others are greedy and greedy when others are fearful.”
Buffett has arguably been more greedy lately with Occidental Petroleum (OXY) than any other stock. He and his investment managers have scooped up millions of shares of the energy company for Berkshire Hathaway‘s (BRK.A) (BRK.B) portfolio. The conglomerate's stake in it now totals close to $9.5 billion.
Occidental has been a huge winner so far this year with the stock more than doubling. However, its price has fallen in recent weeks in anticipation that oil prices could decline.
However, Buffett is clearly betting that oil prices will remain high. In addition to Occidental Petroleum, Berkshire Hathaway also owns a huge position in Chevron. That stake ranks as its fourth-largest stock holding.
Berkshire Hathaway also owns shares of Amazon.com (AMZN). But while Buffett and his team haven't added to their position in the e-commerce and cloud leader lately, another billionaire investor has. David Tepper led his hedge fund, Appaloosa Management, to increase its stake in Amazon by 21% in the first quarter.
Amazon now stands as Appaloosa's second-biggest holding, making up more than 11% of its total portfolio. Tepper definitely likes tech stocks. Alphabet is the hedge fund's top stock.
It's not all that surprising that Appaloosa boosted its stake in Amazon. The stock has fallen more than 30% year to date. While the overall market decline weighed on Amazon, it also faces some company-specific headwinds, including excess capacity.
However, its long-term prospects remain very good. The company should still have plenty of room to grow in its core e-commerce market. Amazon Web Services continues to deliver strong growth. New markets including healthcare also present solid opportunities for it.
Siblings Julian and Felix Baker aren't nearly as well-known as Buffett or Tepper. However, they're billionaire investors with around $25.7 billion in assets under management with their hedge fund, Baker Bros. Advisors.
The Baker brothers are especially bullish about Incyte (INCY) right now. They added 2.5 million shares of the biotech in the first quarter, and it's now Baker Bros. Advisors' second-largest holding.
What makes the Bakers such big fans of Incyte? For one thing, the company's products continue to sell well. Incyte's total revenue jumped by 20% year over year in Q1, led by sales of its blood cancer drug, Jakafi. Autoimmune disease drug Olumiant is also gaining momentum.
Incyte has newer products with strong prospects as well. Sales of blood cancer drug Pemazyre rose 34% year over year in Q1. Atopic dermatitis drug Opzelura is off to a good start after the FDA approved it for sale in the U.S. last year.
The Bakers also probably still view Incyte's valuation as quite attractive, especially in light of its growth prospects. The stock's price-to-earnings-to-growth (PEG) ratio is a super-low 0.66.
Originally published on Fool.com
*Stock Advisor returns as of June 2, 2022
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Keith Speights has positions in Alphabet (A shares), Amazon, and Berkshire Hathaway (B shares). The Motley Fool has positions in and recommends Alphabet (A shares), Alphabet (C shares), Amazon, Berkshire Hathaway (B shares), and Incyte. The Motley Fool recommends the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), short January 2023 $200 puts on Berkshire Hathaway (B shares), and short January 2023 $265 calls on Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy.