Here are some of Warren Buffett’s latest moves in Q3. They lead to some interesting TSX stocks that you should check out.
Warren Buffett’s new stocks in big pharma
Large-cap pharmaceutical companies, including AbbVie, Merck, Bristol-Myers, and Pfizer, got Warren Buffett’s stamp of approval, as the dividend stocks were added to Berkshire Hathaway as new holdings.
Here on the TSX, Jamieson Wellness (TSX:JWEL) stock recently corrected to a more attractive valuation. Currently, analysts think JWEL stock can revisit its recent high of close to $45 for more than 26% near-term upside over the next 12 months from $35 per share.
JWEL had its initial public offering in 2017. Since then, it’s been raising its dividend. By doing this for a couple more years, it’s going to become a Canadian Dividend Aristocrat!
Jamieson falls in the consumer staples sector, but it offers health-related products. Jamieson is the top vitamins, minerals, and supplements (VMS) brand that the company manufactures and markets in Canada and internationally.
The brand has a number one position domestically with a market share of 25% at food, drug, and mass stores, such as Superstore and London Drugs. Consumers can also choose to buy Jamieson’s products online at Amazon and Costco.
Jamieson Wellness increased revenues by 6% in 2018 and 8% in 2019. Its trailing 12-month revenue accelerated to 13% perhaps due to people being more health conscious amid the pandemic.
Earlier this month, the company reported Q3 results and raised its 2020 guidance, expecting revenue to grow about 15%. Specifically, Q3 saw revenue and adjusted EBITDA growth of 19% and 18%, respectively, year over year.
The company on the look out for M&A and sees global growth opportunities in China and the United States. As of Q1, Jamieson already had a leadership position among international VMS brands with 21 products available for the market in China.
One of Buffett’s largest positions
Bank of America (BAC) has become Buffett’s second-largest position in Berkshire’s stock portfolio. Buffett was able to upsize his BAC position by getting his hands on super-cheap shares through the exercise of warrants. Nonetheless, the large position suggests that he remains bullish on the U.S. economy.
Canadian investors can gain exposure to the U.S. economy through Toronto-Dominion (TSX:TD)(NYSE:TD) stock, which moved in tandem with BAC stock recently. Both stocks propelled more than 20% since the start of November.
TD has great exposure to the U.S. retail market. Approximately 36% of its customers reside in the United States. Additionally, it has about 18% more in U.S. deposits than it does domestically.
With about a third of its earnings coming from south of the border, TD Bank’s bottom line will be lifted from a U.S. economic recovery, which saw GDP growth of 33% quarter over quarter — a marked difference versus Canada’s 12% decline.
TD did decently well in an abnormal pandemic world with a trailing 12-month return on equity (ROE) of 10.7% versus its roughly 14% ROE in the past three years. These are better returns than BAC’s.
By investing in TD stock over BAC, Canadian investors also enjoy receiving favourably taxed dividends in non-registered accounts. Furthermore, TD stock provides a bigger yield of 4.4% versus BAC’s 2.5%.
The Foolish takeaway
JWEL may be a suitable stock for investors looking for above-average growth. Conservative investors might consider buying some fairly valued shares in wonderful business TD for income and stable growth in most years.
