Whether you’re into investing or not, I’m almost positive you’ve at least heard of celebrity investor Warren Buffett. The American business magnate is the chairman and CEO of Berkshire Hathaway, a multi-billion-dollar conglomerate holding company that currently trades at just shy of $315,000 as of writing.
I’m also fairly positive you aren’t one of Berkshire’s investors, but that doesn’t mean you can’t get some Buffett action. In fact, Buffett even has some Canadian stocks included in his holdings for Berkshire. Both stocks have a long history of strong performance and — given the slumping markets of late — offer investors a chance to get before a rise.
Let’s take a look at how Buffett’s Canadian holdings have fared so far this year.
Berkshire Hathaway has a 0.7% stake in Suncor (TSX:SU)(NYSE:SU), an energy giant within the Canadian oil and gas industry. The stock has been hit by the slump in the industry, despite pumping out positive earnings.
Those positive earnings come from Suncor’s diverse company. As one area might do poorly, there are others to pick up the slack. The company most recently reported a 10% increase in funds from operations on a year-over-year basis, $1.3 billion in operating earnings, and $1.2 billion in capital returned to shareholders through buybacks and its dividend.
Yet oil volatility keeps this stock undervalued, trading at $37.88 as of writing, which is less than what Buffett paid for it when he reinvested in Suncor back in February (mind you, he paid the U.S. price on the New York Stock Exchange). Year to date, the stock has actually sunk lower by about 1.5%, and this comes from the company not reporting an increase in production from cut backs. But moving forward, as oil and gas rebounds, so too will this huge stock.
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Restaurant Brands International (TSX:QSR)(NYSE:QSR) is another giant of its industry, but this time in the restaurant chain arena. The stock has been on a steady increase since the beginning of 2019, trading near its all-time high just shy of $100 per share. Berkshire Hathaway has a 1.8% stake in the company.
Investors are eager for an update from Restaurant Brands, as the company has been making moves lately — especially with its menu options. Tim Hortons now offers meatless options for customers, and it will be interesting to see whether those options paid off — literally. In its first quarter, a 6.4% increase in sales growth came mainly from opening new restaurants. If I’m an investor, I want to know sales are increasing because of the company’s actions, not just new stores.
Where those new stores could be interesting is if the company acquired even more brands beyond Burger King, Popeyes, and Tim Hortons. It’s a possibility, but not one talked about these days. So, until something big like that happens, I’m staying clear, unless there’s a significant price drop. Restaurant Brands is up almost 40% year to date.
So, there you have it: two Canadian companies that have piqued the interest of Warren Buffett enough for him to add them to his Berkshire Hathaway holdings. If you’re going to consider one today, I would go with Suncor. The company has huge potential for future growth, and once the oil and gas industry rebounds, shares will likely sky rocket. Restaurant Brands is just too pricey at the moment and has too much to prove to warrant any investment on my part.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool owns shares of Berkshire Hathaway (B shares) and RESTAURANT BRANDS INTERNATIONAL INC and has the following options: short October 2019 $82 calls on RESTAURANT BRANDS INTERNATIONAL INC, short January 2021 $200 puts on Berkshire Hathaway (B shares), and long January 2021 $200 calls on Berkshire Hathaway (B shares).