Warren Buffett is a household name for a reason. His investment tips have acted as a guide for beginners and experts alike. Buffett is a proponent of value investing. The essence of this strategy is to buy a stock at less than their intrinsic value, though this strategy may be tough to follow through on right now as TSX Index has soared to a record high at the time of this writing.
“It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.” These are Buffet’s words, and today I want to use this quote as a guideline for two stocks that we will be taking a snapshot of.
These two equities are also owned by the legend himself, so investors can carry that little bit of extra confidence with them if they choose to dip into these stocks today.
Suncor Energy (TSX:SU)(NYSE:SU) is not just a wonderful company, it’s an energy powerhouse. In late 2019 I’d explained why Suncor had remained on my radar even in the face of turbulent oil and gas prices. Warren Buffett has recently added to his existing position in Suncor.
Shares of Suncor have plunged 8% over the past month as of close on February 19. In its Q4 and full-year results for 2019 the company reported Q4 FFO of $2.55 billion, or $1.66 per share compared to $2.00 billion or $1.26 per share in the prior year. For the full-year operating earnings moved up marginally to $4.35 billion over $4.31 billion in 2018.
Oil prices have bounced back somewhat in the back half of this month. Suncor looks like a prime buy-the-dip candidate, especially for those on the hunt for income.
The stock last possessed a favourable price-to-earnings ratio of 12 and a price-to-book value of 1.4. Shares just recently climbed out of technically oversold territory the company fell into in early February.
Suncor last approved a quarterly dividend payout of $0.465 per share – an 11% increase representing a 4.6% yield.
Restaurant Brands International
Restaurant Brands International (TSX:QSR)(NYSE:QSR) is another Buffett Canadian favourite. The company is a giant in the fast food space, owning and operating the Burger King, Tim Hortons, and Popeyes Louisiana Chicken chains.
Shares of RBI have increased 5.3% in 2020 as of close on February 19. I’d recommended RBI as a potential value pick back in October 2019.
The company released its fourth quarter and full-year results for 2019 on February 10. As usual, Burger King was the model of consistency, posting system-wide sales growth of 9%.
Popeyes was the big surprise, as it delivered system-wide sales growth of 42% in Q4 2019. Tim Hortons has continued to lag, which has inspired growth initiatives from RBI’s management.
Overall, RBI reported adjusted EBITDA of $2.30 billion in 2019, up 6.5% from 2018. It posted net restaurant growth of 5.2%. RBI possesses a high P/E ratio and P/B value, but value-wise, it’s still beating out its industry peers. The stock last paid out a quarterly dividend of $0.50 per share, which represents a 3.1% yield.