Warren Buffett probably ranks as the most frequently quoted investor in history. One of his most famous statements seems especially applicable in the current market environment: “Be fearful when others are greedy. Be greedy when others are fearful.”
There’s no question that many investors are fearful as a result of the stock market’s volatility. However, true to form, Buffett is showing some signs of being greedy. Here are three stocks that Buffett is betting on big time right now.
Buffett’s Berkshire Hathaway (BRK.A -1.36%) (BRK.B -1.12%) added to its positions in only a handful of stocks in the fourth quarter of 2021. Chevron (CVX 0.95%) was one of them. And Berkshire’s regulatory filing for its first-quarter results reveals that Buffett is still a fan of the oil and gas stock. As of the end of Q1, Berkshire owned $25.9 billion of Chevron shares.
There’s no mystery behind why Buffett likes Chevron these days. Russia’s invasion of Ukraine disrupted energy markets. Demand is picking up with fewer travel restrictions related to COVID-19. Oil prices have soared as a result of these factors.
Unsurprisingly, Chevron stock has trounced the market. Based on Berkshire’s increased stake in the company during the first quarter, Buffett seems to think this outperformance can continue. He could very well be right.
Chevron stands as one of the strongest oil companies from a financial perspective. It’s also expanding into clean energy with the pending acquisition of Renewable Energy Group.
2. Occidental Petroleum
While Chevron is Buffett’s favorite oil stock, it’s not his only one. Berkshire has also been busy scooping up shares of Occidental Petroleum (OXY -1.46%).
In Berkshire’s Q1 regulatory filing, the company revealed that it had bought Occidental preferred stock, along with warrants to buy up to 83.86 million shares of common stock. Last week, another regulatory filing disclosed that Berkshire now owns 142.3 million Occidental shares.
Occidental should benefit from many of the same tailwinds as Chevron. Like Chevron, Oxy is also ramping up its clean-energy initiatives, including carbon capture projects.
Buffett probably especially likes the Occidental preferred stock that Berkshire owns. Those shares pay a juicy dividend yield of 8%. It won’t take much share appreciation for this investment to pay off nicely.
Tech stocks haven’t exactly been Buffett’s forte in the past. He’s had a few successes but some notable flops, as well. However, this mixed record didn’t deter Berkshire from opening a huge position in HP (HPQ -0.06%) recently.
Early last month, Berkshire purchased nearly 121 million shares of HP. It now stands as the largest shareholder of the technology giant, owning around 11% of its outstanding shares.
Why does Buffett (or one of his investment managers) like HP so much? The most likely reason is that the stock is cheap. Even with the boost provided by the revelation of Berkshire’s stake, HP’s shares trade at only 8.6 times expected earnings.
Buffett probably also likes HP’s dividend yield of 2.7%. And he’s a fan of share buybacks. HP plans to repurchase at least $4 billion of its stock this year.