During the dot-com craze, Buffett warned about running after internet stocks. During the recession, he warned about selling stocks. Now, on the verge of a recession, Warren Buffett is nowhere to be found.
Yet this time around, it might just be that Buffett doesn’t have the same fears as he did before. Instead, the investment mogul just isn’t too crazy about the markets right now. And it shows
Buffett currently has almost half of his Berkshire Hathaway sitting aside as cash. For what he does have invested, it’s clear that Buffett is sticking to his strategy of value investing.
Almost half of his investments are with the financial sector — an area that would seem quite contrarian to most investors at this point, but to Buffett it seems to look like a long-term opportunity.
There are several other areas where Buffett is seeing opportunities, however, including two Canadian companies. Both Suncor Energy Inc. (TSX:SU)(NYSE:SU) and Restaurant Brands International Inc. (TSX:QSR)(NYSE:QSR) are companies that Buffett has chosen to invest in as of late.
Both companies follow the same Buffett logic: to find value stocks with a solid future ahead of them. That’s the case with both Suncor and Restaurant Brands.
Suncor is unnecessarily cheap at the moment. The stock is trading around the same share price levels as the beginning of the year, but this is due to the oil and gas industry slump as a whole.
The energy company has been posting stellar earnings results, much of which comes from being a fully integrated energy company.
This means it explores, drills, refines, produces, and sells its own oil products. So while the price of oil might be down, it actually gives the company some opportunities to start building on its investments on the cheap.
Meanwhile, Suncor is still expecting to push forward with growth even during a recession. The company expects earnings to rise by 23% for 2019, with net income rising $2.7 billion in the last quarter, a 177% increase from the same time last year, much of this due to the success of its downstream operations.
With analysts predicting the stock to rise by 50% in the next 12 months, that makes its current share price around $40 an absolute Warren-Buffett-worthy steal.
As for Restaurant Brands, this company might not be the bargain of Suncor, but it’s certainly an excellent long-term investment. The company owns three huge restaurant chains, namely Popeyes Louisiana Chicken, Burger King, and Tim Hortons.
When even the slightest news hits, shares start soaring. This happened most recently when Popeyes announced a new chicken sandwich. The stock is now nearing its all-time high of just over $100 per share.
While I might want to wait for a dip before investing in this stock, Restaurant Brands has a strong future ahead of it. The merger of these three companies has put each restaurant chain into incredibly experienced hands, looking for new and better ways to develop the customer experience and keep a strong bottom line.
Those developments can then be implemented to new retail chains the company could acquire in the future.
While analysts are predicting the stock to rise to as high as $120 per share in the next 12 months, it could also see a fall in the short-term with a recession. This could be a huge dip, and the perfect time to pick up shares for long-term growth.
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 RESTAURANT BRANDS INTERNATIONAL INC and has the following options: short October 2019 $82 calls on RESTAURANT BRANDS INTERNATIONAL INC.