With the stock market still in the doldrums, it’s becoming increasingly difficult to determine which stocks to buy. Fortunately, a number of top big money investors have already navigated similar situations in the past and grown their respective portfolios. By observing these investors’ tactics and following suit, you can improve your chances of success in a turbulent market climate.
Big money investors understand that success in the stock market often comes not from hitting home runs with high-risk bets, but rather from making smart trades based on an understanding of expected returns and suggested safety measures. This knowledge has allowed them to diminish their potential losses while retaining their upside potential.
Thus, with careful planning, big money investors can benefit from reduced volatility with solid investment options tailored for unique situations. This provides a steady path toward wealth creation and financial stability.
With that said, let’s dive into three stocks the big money is buying right now.
Louisiana-Pacific (NYSE:LPX) is an innovative building products supplier that has become a key addition to Warren Buffett’s Berkshire Hathaway (NYSE:BRK-B) equity portfolio. The investment conglomerate added 5.8 million shares of LPX in the third quarter, which surprised many.
Headquartered in Nashville, Tennessee, Louisiana-Pacific stands apart from many competitors by manufacturing unique building products for multiple applications. From new construction to repair and remodeling projects, LPX provides a wide variety of high-quality materials to meet the needs of its customers.
The real estate market is in a difficult spot due to the Fed’s monetary tightening measures. However, LPX stock is currently an attractive investment, trading at just 1.1-times forward sales. Moreover, this stock offers a growing 1.4% dividend yield, supported by a massive buyback program. Additionally, with its strong margin profile and cash flow expansion prospects, this is a company with what appears to be a wide margin of safety.
Taiwan Semiconductor (TSM)
Taiwan Semiconductor (NYSE:TSM) has long dominated the semiconductor foundry market due to its stellar reputation for excellence and innovation. Taiwan Semi has been at the forefront of the sector due to its cutting-edge processes and technologies, providing a distinct cost advantage alongside better product features. As a result, customers receive full access to leading-edge solutions at a comparatively lower price.
Accordingly, with the U.S. banning semiconductor equipment produced from Chinese foundries, Taiwan Semi remains in a prime position to benefit from the resulting windfall in sales. Recent results have been incredible, with its sales up over 37% on a year-over-year basis. More importantly, its EBITDA margin has expanded to an even greater degree.
With industry-leading margins, the firm is in an excellent position to continue performing remarkably well for the foreseeable future. Hence, it’s no surprise that Berkshire Hathaway bought more than $4.1 million of TSM stock in the third quarter.
Occidental Petroleum (OXY)
Occidental Petroleum (NYSE:OXY) is an American energy company that operates in various sectors including oil and gas production, chemical production, midstream services, and marketing.
The company has quietly become one of the largest publicly-owned businesses in the United States. With operations in North America, Latin America and throughout the Middle East and Africa, Occidental has a global reach, unlike many other major energy companies. With such a strong presence worldwide, Occidental Petroleum continues to be a leader in the global energy industry, making it one of the most attractive investment opportunities available today.
Like its peers, OXY stock has benefitted immensely from the robust energy market this year. The company generated massive cash flows in recent quarters, with operating cash flow growth more than 80% higher this year. This surge in cash flows provides the company with greater capital allocation flexibility. Consequently, Occidental’s management team has continued to reinvest aggressively to fuel future growth.
Big money investors have been loading up on OXY stock in droves. Buffet has continued accumulating OXY stock between $55 to $62 over the past three quarters. Billionaire investor Carl Icahn also increased his stake in the company during the third quarter, scooping up 843,638 more shares.
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.