Warren Buffett Just Made Huge Bets in This Surging Industry: It’s Time to Follow Him!

Bausch Health Companies Inc. (TSX:BHC)(NYSE:BHC) stock is a great TSX stock to buy if you’re like Warren Buffett and see a healthcare bull market.

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

Image source: The Motley Fool

Warren Buffett is bullish on drug stocks. At least, in the latest quarter, which revealed Berkshire Hathaway’s big bets on various drug makers, including the likes of Pfizer and AbbVie, among a few others. The former announced a 90% effective coronavirus vaccine last week. Pfizer shares popped before running out of steam, as other vaccine developer Moderna raised the bar further, with a 94.5% effective vaccine.

Good COVID-19 vaccine news could fuel a massive bull market in pharmaceutical and healthcare stocks

The recent slew of vaccine news isn’t just good. It’s incredible and well beyond the muted expectations of many health experts, including the likes of NIAID (National Institute of Allergy and Infectious Diseases) top doctor Anthony Fauci, who was calling for a vaccine with a much lower efficacy rate for a shot at conquering the coronavirus pandemic in 2021. The incredible vaccine news has given a lift to the stock market, which now looks unstoppable, following recent price target hikes by various sell-side institutions. While many drugmaker stocks have already surged following the latest unforeseen round of vaccine news, shares of Pfizer have barely budged when you zoom out to have a look at the long-term chart.

Warren Buffett’s stake in the former Dow Jones Industrial component is likely to give the pharmaceutical behemoth another bounce. But I think the name could have much more upside once it finally has a chance to pull the curtain on its results, once vaccines have been shipped.

Should you follow Warren Buffett into drug stocks?

Canadian pharma play Bausch Health Companies (TSX:BHC)(NYSE:BHC) may be viewed as a compelling way to mirror Warren Buffett’s big bets across a wide range of U.S. drug makers. While the firm does not have another super-effective coronavirus vaccine up its sleeves, it could still stand to rally alongside the broader health stock bounce over that could be in the cards over the coming weeks and months.

The firm, formerly known as the infamous Valeant Pharmaceuticals, has been picking up traction once again following upbeat guidance that could fuel a sustained rally as beaten-down health plays look to bounce back from the horrific market crash suffered back in February and March.

Bausch recently pulled the curtain on in vitro data that showed the “inactivation” of the SARS-CoV-2 virus, the insidious virus that causes COVID-19, in some of its eye drops preserved with a benzalkonium chloride solution. Bausch CEO Joe Papa did note that the relevance remains unknown and that he and his team will “further review” the data “to determine the next steps.”

The Foolish bottom line on Warren Buffett’s latest bets

While the study is unlikely to be a major needle mover on Bausch stock, the development is encouraging and is a testament to the firm’s incredible R&D team behind its wonderful eye care business. As health stocks look to take off again, both COVID and non-COVID ones, I’d look to punch my ticket to a cheap one like Bausch in the attempt to follow Warren Buffett’s latest moves.

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 Joey Frenette owns shares of Berkshire Hathaway (B shares). Tom Gardner owns shares of Bausch Health Companies. The Motley Fool owns shares of and recommends Bausch Health Companies and Berkshire Hathaway (B shares) 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 December 2020 $210 calls on Berkshire Hathaway (B shares).

More on Coronavirus

Dad and son having fun outdoor. Healthy living concept
Dividend Stocks

1 Growth Stock Down 15.8% to Buy Right Now

A growth stock is well-positioned to resume its upward momentum in 2024 following its strong financial results and business momentum.

Read more »

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

3 Things About Couche-Tard Stock Every Smart Investor Knows

Couche-tard stock (TSX:ATD) may be up 30% this year, but look at the leadership and history of the stock to…

Read more »

Plane on runway, aircraft
Coronavirus

Can Air Canada Double in 5 Years? Here’s What it Would Take

Air Canada (TSX:AC) stock has gone nowhere since 2020. Can this change?

Read more »

Senior housing
Stocks for Beginners

Home Improvement Stocks Are Set to Fall (When They Do, Buy These Like Crazy!)

Home improvement stocks are due to drop further in the coming months. But with solid underpinnings for the sector, it…

Read more »

An airplane on a runway
Coronavirus

Forget Boeing: Buy This Magnificent Airline Stock Instead

Boeing (NYSE:BA) stock is looking risky right now, but Air Canada (TSX:AC) stock? Much less so.

Read more »

Man considering whether to sell or buy
Stocks for Beginners

Goeasy Stock: Buy, Sell, or Hold?

When it comes to smart buys, goeasy stock (TSX:GSY) is up there as one of the smartest money can buy.…

Read more »

Woman has an idea
Stocks for Beginners

Here’s Why Magna International Is a No-Brainer Value Stock

Magna stock (TSX:MG) has been climbing back once more, but still offers huge value for long-term minded investors.

Read more »

Aircraft wing plane
Coronavirus

1 TSX Stock Down 60% That Could Bounce Back Stronger

Air Canada (TSX:AC) stock got severely beaten down in the March 2020 COVID crash. Here's why it's probably not going…

Read more »