Be a Warren Buffett Copycat: “Buy Right and Sit Tight”

Copying the strategies of Warren Buffett is a clever idea. With quality stocks like Suncor stock and Restaurant Brands stock, you focus on the long term.

| More on:
close-up photo of investor Warren Buffett

Image source: The Motley Fool

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more

“Buy right and sit tight” is an investing tip of value investor Warren Buffett. His message is clear. The market could surge or collapse at any time. However, if you’re buying quality stocks, you don’t need to time the market. Instead, follow the lead of Buffett. You can earn millions by holding shares for very long periods.

Berkshire Hathaway, Buffett’s conglomerate, has only two Canadian stocks in its portfolio of stocks, Suncor (TSX:SU)(NYSE:SU) and Restaurant Brands (TSX:QSR)(NYSE:QSR). Buffett’s most famous advice is to invest in what you know, and Canadians understand the businesses of these two quality investments.

Buffett advises that if you’re not thinking of owning the stocks for at least 10 years, don’t even think of owning them for 10 minutes. Hearing these words is a subtle endorsement. Why else would Buffett invest in both stocks and keep them?

Double winnings

Despite the heightened volatility in the energy sector, it seems that Buffett is confident about the sustainable growth and future profits of Suncor. This $62.17 billion oil and gas integrated company can endure the headwinds. Since its refining assets are diversified, Suncor has clear advantages over industry peers.

Buffett is aware that Suncor will go through poor periods and correction, yet he will choose not to sell out. He sold his shares in 2016 then corrected his mistake by repurchasing Suncor shares in 2018. Going by the company’s historical performance, this oil giant overcomes turmoil and creates shareholder value.

Suncor is down 4.95% year to date, although analysts remain bullish. They are forecasting the price to hit $58 (+43.4%) in the next 12 months. Add the 3.94% yield for a pair of wins in both dividend and capital gain. You can wait for Suncor to report its Q4 2019 financial results on February 5, 2020, before taking a position.

Supersized gains

The buzz in the quick-service restaurant industry is that Restaurant Brands’s operating margin is outperforming 96% of its global competitors. This $24 billion fast-food chain operator (Burger King, Tim Hortons, and Popeyes Louisiana Kitchen) has been enjoying steady growth in recent years.

Since Buffett is a value investor, you have a hint that QSR has a long runway for organic growth as well as new store openings worldwide. The best part is that almost all of the fast-food stores are franchises, and the properties they stand on have existing leases with Restaurant Brands.

Buffett looks for quality businesses, and he delights in Restaurant Brands because of the multiple revenue streams it has created. You can also partake in the 3.14% dividend the stock pays at present.

Analysts see QSR climbing by 31.28% in a year. Also, one analyst notes that since 1996, restaurant stocks usually rise during U.S. election years. You might see Restaurant Brands deliver supersized gains in 2020.

Simple approach

When you decide to take a position on Suncor and Restaurant Brands, sit tight, just like what Warren Buffett is doing. The market won’t keep on you an edge if you own both. Buffett is a billionaire because he has a realistic plan and a long-term view.

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 Christopher Liew has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares). The Motley Fool recommends RESTAURANT BRANDS INTERNATIONAL INC and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short March 2020 $225 calls on Berkshire Hathaway (B shares).

More on Dividend Stocks

edit Back view of hugging couple standing with real estate agent in front of house for sale
Dividend Stocks

Why Real Estate Stocks Are a No-Brainer Addition to Your Portfolio

Real estate stocks, especially REITs, offer some distinct advantages over other types of stocks, making them must-have additions to most…

Read more »

Various Canadian dollars in gray pants pocket
Dividend Stocks

3 Top TSX Dividend Stocks to Buy for Monthly Passive Income

Top TSX stocks with monthly dividends now trade at cheap prices for investors seeking passive income.

Read more »

Canadian Dollars
Dividend Stocks

Create Free Passive Income and Turn it Into Thousands With 1 TSX Stock

If you can't afford to invest, you can certainly create passive income another way and use that to invest in…

Read more »

Payday ringed on a calendar
Dividend Stocks

Canadian Dividend Investors: 2 ETFs That Pay Monthly Income With High Yields

Dividend ETFs often pay out monthly distributions compared to dividend stocks.

Read more »

think thought consider
Dividend Stocks

2 Stocks I Own and Will Buy More of if They Fall

Stocks tend to go up in the long run. Therefore, buying a basket of diversified stocks on dips should lead…

Read more »

Various Canadian dollars in gray pants pocket
Dividend Stocks

2 Oversold TSX Dividend Stocks to Buy for Passive Income

Blue-chip dividend stocks such as Royal Bank of Canada and Manulife Financial pay investors a tasty forward yield.

Read more »

TFSA and coins
Dividend Stocks

TFSA Passive Income: 3 Solid Stocks to Earn $355 Every Month

Looking to earn steady passive income? Here are three solid TSX stocks that can help you earn a worry-free passive…

Read more »

Technology
Dividend Stocks

RRSP Investors: 2 Stocks to Buy in August for Dividends and Capital Gains

RRSP investors can still find top TSX dividend stocks trading at cheap prices today for a buy-and-hold portfolio.

Read more »