Warren Buffett: it’s a name you’ve likely heard, even if you’re absolutely brand new to investing. And there’s a reason. As of April 2022, Buffett is estimated to be worth over US$125 billion. This makes him the fifth-wealthiest person on the planet.
How does he do it?
While I’m not saying that a Motley Fool investor will walk away from this article with a path towards billions, millions could indeed be in your future if you use the Warren Buffett investing strategy and apply it to Canadian stocks.
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The strategy
When it comes to investing like Warren Buffett, it comes down to one thing: value. Value stocks are those that trade incredibly low based on their worth. Instead of focusing on the complexities of the stock market, investors should instead look at companies as a whole.
To do this, Motley Fool investors should look at how a company has performed, the debt on hand, and profit margins. Furthermore, it’s important to look at the future of the company. This could include how reliant they are on commodities and, of course, how cheap they are relative to that future growth.
As you can imagine, it’s not exactly easy for Warren Buffett to find value stocks. In fact, the investing tycoon continues to have a record amount of cash on hand, just waiting for the right opportunity. But that doesn’t mean you have to wait.
Invest like Warren Buffett
While Warren Buffett needs to wait to find further opportunities, Motley Fool investors can use this strategy and look at his holdings to find their own value stocks. But I wouldn’t invest directly in the stocks he already owns, because he’s already invested in them with quite a lot of money. When Buffett invests, people follow his moves, and the value the company enjoyed disappears almost immediately.
Instead, look at the sectors he’s interested in to find value stocks. I would look at the top positions that his company, Berkshire Hathaway, has and try to find Canadian stocks like it. Right now, the top five positions include Kraft Heinz, Coca-Cola, American Express, Bank of America, and a whopping 47.6% to Apple.
A Canadian Apple
Clearly, if you’re going to try and find value stocks to invest like Warren Buffett, you’ll want something like Apple. That’s easier said than done. But long-lasting technology is certainly a strong place to go if you can find cheap stocks that have soaring future value.
The key will be to find technology stocks that have a solid history of past growth and a future full of growth as well. For that, I would consider Open Text (TSX: OTEX)(NASDAQ: OTEX) a solid option.
Open Text has come a long way since its early days as a software indexer of the Oxford English Dictionary. It is now an enterprise information management company, providing cybersecurity and organization to major companies. Some include Amazon and Alphabet, but the list keeps growing.
What Motley Fool investors should love about the stock is that it’s old. You get decades of historical growth to count on, with the company finding a strategy that remains intact to this day. As it continues to expand its offerings in this new tech-heavy world, Open Text will continue to have a place and path to growth.
Foolish takeaway
Open Text remains a strong consideration if you want to invest like Warren Buffett. Shares are up about 2,100% as of writing since coming on the market in 1998. It continues to grow through major partnerships and through acquisitions. Yet right now, it offers Motley Fool investors a deal, as it trades down 22% after reaching all-time highs.
Furthermore, since the tech stock is a solid long-term buy, investors shouldn’t be put off by a fairly valued 23.46 times earnings — especially as its risk remains so low in this environment. Plus, you get a solid 2.09% dividend yield as of writing.
Those are all points Warren Buffett would be proud of.
