Warren Buffett Thinks These 2 Canadian Stocks Will SOAR!

Warren Buffett thinks Suncor Energy (TSX:SU)(NYSE:SU) will win out long term. There’s another Canadian stock he likes, too.

| More on:
Paper airplanes flying on blue sky with form of growing graph

Image source: Getty Images

Warren Buffett isn’t known for investing in Canadian stocks. He prefers to buy what he knows, which results in him mostly sticking to his home turf. Nevertheless, he’s made the odd TSX play here or there. The vast majority of his portfolio is still U.S. equities, but he’s got some Canadian exposure in the mix. In fact, he’s been actively increasing his position in some Canadian stocks this year. In this article, I’ll be exploring two Canadian stocks that Warren Buffett thinks will soar.

Suncor Energy

Suncor Energy (TSX:SU)(NYSE:SU) is an integrated oil and gas company that Buffett has bought and sold repeatedly over the years. His most recent purchase was this year, when the stock was around $20. In 2018, he initiated a position when SU was around $40.

Buffett is down so far on both of these purchases. Suncor got rocked by the COVID-19 crisis this year, losing $614 million in the second quarter. That’s not the worst loss by an energy company this year by any means. As a percentage of revenue ($4.2 billion), it’s actually fairly small, although the operating loss ($1.5 billion) was a lot bigger.

It’s hard to say why Warren Buffett likes this stock so much. It is trading for less than book value, so it could be considered a value play. But if it keeps losing money, then obviously its tangible book value will evaporate over time. Overall, this probably isn’t the best Buffett play to try copying in 2020.

Barrick Gold

Barrick Gold (TSX:ABX)(NYSE:GOLD) is another TSX stock that Buffett picked up in 2020 — in this case, for the first time ever. When it was revealed this summer that Buffett purchased Barrick Gold, it created quite a stir. Buffett isn’t known for love of gold stocks. In fact, he’s spoken out against gold on many occasions. However, Barrick is undeniably profiting from this year’s bullishness in gold. In its most recent quarter, it beat on both revenue and earnings, and its stock is up 49% year to date.

One theory about the Barrick purchase is that it wasn’t really Buffett’s at all. Buffett has two other money managers — Todd Combs and Ted Weschler — working for him. They manage a certain percentage of Berkshire’s assets independently. It’s possible that one of them made the Barrick investment. In that case, it wasn’t really Buffett who bought the shares. However, as the CEO, the buck stops with him. He could have prevented Todd or Ted from buying Barrick if he wanted to. So, it seems likely that his position on gold has softened at least a little.

Foolish takeaway

Buffett has never been the biggest fan of Canadian stocks — or non-U.S. stocks in general. But that hasn’t stopped him from buying a few this year. His overall results with these Canadian buys have been mixed. He’s way up on his Barrick investment but losing money on Suncor. If there’s anything we can take away from Buffett’s Canadian purchases, it’s that he’s not bearish on Canada as a whole. Beyond that, there’s little to be said.

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 Andrew Button has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares) and recommends the following options: short January 2021 $200 puts on Berkshire Hathaway (B shares), long January 2021 $200 calls on Berkshire Hathaway (B shares), and short December 2020 $210 calls on Berkshire Hathaway (B shares).

More on Dividend Stocks

Specialty Brands faces higher raw materials costs.
Dividend Stocks

What’s Next for Premium Brands Stock?

Shares of the specialty food production and distribution company have fallen about 25% since last October.

Read more »

Double exposure of a businessman and stairs - Business Success Concept
Dividend Stocks

2 Interesting Buys in Any Market

Here are two intriguing buys in any market climate that offer defensive appeal as well as growth and income earning…

Read more »

Dividend Stocks

TFSA Investors: 3 TSX Stocks for Tax-Free Passive Income

These Canadian corporations have strong visibility over future earnings and dividend payouts.

Read more »

Simple life style relaxation with Asian working business woman healthy lifestyle take it easy resting in comfort hotel or home living room having free time with peace of mind and self health balance
Dividend Stocks

Lazy Landlords: 3 Cheap Canadian REITs to Buy in May 2022

You can become a passive landlord today by investing in Canadian REITs. Here are three cheap REITs to consider this…

Read more »

Target. Stand out from the crowd
Dividend Stocks

4 High-Yield TSX Stocks to Buy Ahead of Their Ex-Dividend Dates

If you have some cash lying idle, consider these high-yielding TSX stocks.

Read more »

growing plant shoots on stacked coins
Dividend Stocks

Passive Income: 3 TSX Stocks With Rapidly Growing Dividends

Worried about inflation? Here are three passive-income stocks to buy that pay rapidly growing dividends.

Read more »

Family relationship with bond and care
Dividend Stocks

Retirees: 4 Safe Stocks to Buy for Decent Passive Income

Retirees can offset the impact of runaway inflation by buying safe dividend stocks to create more cash flows.

Read more »

Canadian energy stocks are rising with oil prices
Dividend Stocks

3 Canadian Energy Stocks to Buy for Reliable Passive Income

Canadian energy stocks are gushing cash. Here's three top stocks that are perfect buys for reliable passive income.

Read more »