Warren Buffett’s actions in 2020 were watched closely by the investing world. Investors big and small were eager to glean pointers from the Oracle of Omaha. In the first half of 2020, Buffett was confounded by market fluctuations. Buffett would go on to surprise investors even more in the second half of the previous year. Today, I want to look at two stocks that Warren Buffett might seek to buy and sell in the first month of 2021.
Warren Buffett: Why the second time may be the charm for airline stocks
The Oracle of Omaha made a big bet on stocks like Delta Air Lines, American Airlines, and Southwest Airlines in the spring of 2020. This came after airliners were hit hard by the market pullback in the late winter and early spring. At the time, there was hope that new restrictions and lockdowns would be short lived. When the severity of the crisis became apparent, Warren Buffett moved quickly to back away from his airline bet.
While Buffett backed away from U.S. airliners, I’d suggested that investors should consider scooping up Air Canada (TSX:AC). In early May, the stock’s price was hovering around the $15 mark. Air Canada has faced major challenges during the pandemic, but shares rebounded in the fall. Its stock closed at $23.01 on January 5. That is a solid return from the lows it reached in the spring.
Canada is still battling the pandemic, but there is light at the end of the tunnel, as vaccines are being distributed. This means there is hope for Air Canada and its peers in 2021 and beyond. Warren Buffett may have been early on his airline call. Canadian investors should consider stashing Air Canada at its current price today.
Gold is soaring, but don’t expect Buffett to change his habits again
The yellow metal has been overshadowed by the electric performance of digital currencies in late 2020 and early 2021. However, gold may be worth a look again, as it has started hot in the new year. The spot price of gold was hovering around the $1,950 mark at the time of this writing.
Warren Buffett stunned onlookers when Berkshire Hathaway purchased $500 million in Barrick Gold stock in the summer of 2020. However, Berkshire went on to shed over 40% of its stake in Barrick in the third quarter. Buffett likely has his sights set elsewhere in 2021, but should you look to dip back into gold stocks?
Kirkland Lake Gold (TSX:KL)(NYSE:KL) has been one of the best-performing stocks on the TSX over the last decade. Because of this, its performance in 2020 looked somewhat muted in comparison to its industry peers. Shares have dropped 14% over the past three months as of close on January 5. In Q3 2020, the company saw its cash position improve 58% year over year. Gold production and sales boomed compared to the previous year.
This top gold miner will continue to benefit from the improved price of gold in comparison to the same time last year. Moreover, this gold stock last had a favourable price-to-earnings ratio of 15. Warren Buffett may be distancing himself from gold, but investors may want to consider Kirkland Lake in this bullish environment.
On the topic of stocks to add in early 2021...
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Fool contributor Ambrose O'Callaghan owns shares of KIRKLAND LAKE GOLD LTD. The Motley Fool recommends Delta Air Lines and Southwest Airlines.