If you want to invest like Warren Buffett, the easiest way to do so is simply look at what he’s invested in. Yes, it does sound simple, and it is! If you want Canadian stocks that are similar to what Warren Buffett invests in, then it gets only slightly trickier. But not by much. You now just have to look at the themes Buffett is using to make his investment decisions.
But here’s a tip: it all comes down to value. Find those stocks with solid fundamentals and a strong potential for future growth that still look cheap. Here are three Canadian stocks that are perfect for any Tax-Free Savings Account (TFSA) and are similar to stocks Warren Buffett already invests in.
Verizon vs. Telus
One of the new purchases made by Berkshire Hathaway recently is in Verizon Communications. The company purchased 146,716,496 shares for a purchase price of US$8.62 billion. The stock is a solid income stock with a strong future with the 5G rollout. So, what can investors get that’s similar? TELUS (TSX:T)(NYSE:TU), of course!
Telus has been expanding at a rapid pace, both on the stock market through its international tech offering, and through its wireline business. The company laid down all the wireline it needed to rollout 5G, making it likely the first to receive full revenue from the 5G network while its peers play catchup.
Yet the stock is still a great buy even with a rise of 23% in the last year. Its price-to-sales (P/S) ratio sits at 2.1, and price-to-book (P/B) ratio at 2.7, both solid indicators of an undervalued stock. The stock also offers a 4.61% dividend yield for today’s investor! And with a compound annual growth rate (CAGR) 0f 7.4% in the last decade, this is a perfect long-term hold.
Chevron vs. Magna
It’s clear why Berkshire would invest in Chevron given the rebound in oil and gas. The company is due for an explosion in share price with an oil and gas rebound, with fundamentals to drool over. No wonder Berkshire bought 48,498,965 shares for a US$4.10 billion stake in the company.
But you don’t have to go big or go home. There are plenty of strong options to choose from in an oil and gas rebound. One that I would be interested in picking up is TC Energy (TSX:TRP)(NYSE:TRP). The stock actually managed to rise during all the oil and gas glut, thanks to it bringing pipelines online. Shares are up just 5% in the last year after a drop off, but that’s due to climb even higher as oil and gas gets moving again.
Yet again, fundamentals are strong for this company. It has a P/B ratio of 2.2, a P/S ratio of 4.4, and a potential upside of 33% from analysts! Meanwhile, you’d also lock in a 5.96% dividend yield. Given that the company is supported by long-term contracts, this is a great stock to buy and forget about for years down the road.
You don’t have to buy up the exact stocks purchased by Warren Buffett in your TFSA. In fact, there are plenty of strong options out there if you simply look at the industries he’s buying rather than the stocks themselves. Oil and gas and 5G are two strong options for any portfolio. So, buying stocks like Telus and TC Energy are strong options to see your portfolio rise in the next few years.
But if you do want to be just like Warren Buffett, you'll want stocks like these to reach billionaire status!
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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 Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares). The Motley Fool recommends TELUS CORPORATION and Verizon Communications and recommends the following options: short January 2023 $200 puts on Berkshire Hathaway (B shares) and long January 2023 $200 calls on Berkshire Hathaway (B shares).