Warren Buffett bets on banks
Back in August, I discussed one of Warren Buffett’s favorite economic indicators. The so-called Buffett indicator takes the combined market capitalizations of publicly traded stocks around the world and divides the figure by the global gross domestic product (GDP). At the end of the summer, this indicator read over 100%. This suggests that the market is currently overvalued.
Either way, Warren Buffett has been aggressive in hiding a leading bank in the United States. He added to Berkshire Hathaway participations in Bank of America but sought to sell millions in Goldman Sachs, Wells Fargo, and JP Morgan Stock. Investors may be confused by these moves, but it is perfectly in line with Buffett’s value investing strategy. The good news is that several large Canadian banks currently offer even more value than Bank of America.
Bank of Montreal is the fourth largest of the six major Canadian banks. Its shares fell 15% in 2020 at the close on September 2. The last stock had a price-to-earnings (P / E) of 11 and a price-to-book (P / B) of one. This places BMO stock in favorable value territory relative to its industry peers. Better yet, it last paid a quarterly dividend of $ 1.06 per share. This represents a high yield of 5.1%.
It doesn’t hurt to go for gold
Warren Buffett shocked the investing world when it was revealed that Berkshire Hathaway had added more than $ 500 million Barrick Gold Stock. Buffett was skeptical of the yellow metal. However, gold hit record highs in 2020. The company still holds a small stake compared to its other major stocks. However, this illustrates the momentum of gold and the qualification of Barrick stock.
Barrick shares have climbed 61% so far this year. The stock still offers a favorable P / E ratio of 11 and a P / N value of 2.4. In addition, this leading gold producer has an excellent balance sheet. Investors looking to gain exposure to gold should feel happy to follow in Warren Buffett’s footsteps with Barrick.
Another stock endorsed by Warren Buffett
Following Warren Buffett’s value investing model, we should aim for undervalued sectors in addition to stocks. Restaurants have gone through a very difficult time due to the COVID-19 pandemic. However, fast food operators have been in a stronger position compared to their peers.
Restaurant Brands International owns and operates three major chains; Burger King, Tim Hortons and Popeyes Louisiana Chicken. RBI shares fell 8.1% in 2020. The company last announced a quarterly dividend of $ 0.52 per share, which represents a return of 3.7%. RBI stocks last had a P / E ratio of 27, putting it in above-average value territory relative to its industry peers.
Here are some other actions investors should consider in September …
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Foolish contributor Ambrose O’Callaghan has no position in any of the stocks mentioned. The Motley Fool owns shares and recommends Berkshire Hathaway (B shares). The Motley Fool recommends RESTAURANT BRANDS INTERNATIONAL INC and recommends the following options: long January 2021 calls $ 200 on Berkshire Hathaway (B shares), short January 2021 $ 200 put on Berkshire Hathaway (B shares) and short September 2020 calls $ 200 on Berkshire Hathaway (B Actions).