Invest Like Warren Buffett With This Canadian Gem

Warren Buffett is one of the greatest investors of all time, and this is his most recent Canadian pick!

| More on:

Investing icons like Warren Buffett have made their billions over the decades for a reason. I’m an investor looking to follow in these footsteps. If you find yourself in a similar camp, this Canadian stock is for you.

Barrick Gold

One of the only Canadian stocks Mr. Buffett’s Berkshire Hathaway has added in the recent past is Barrick Gold (TSX:ABX)(NYSE:GOLD). This Canadian gold miner has been a top pick of mine for years. This validation from the Oracle of Omaha is welcome for Foolish readers who have taken my previous advice.

Barrick’s value has only been partially appreciated by the market right now. In my view, this is a stock that has 25% upside, at least to Q3 levels, based on where gold prices are today and where I see gold prices headed in the near term.

Gold prices can only go up from here

We’ve seen stimulus measures pick up of late, with congress recently passing a new stimulus bill in the United States. In Canada, stimulus continues, and most central banks around the world remain highly accommodative. Every dollar printed devalues currencies globally. When commodities like gold are priced in U.S. dollars, U.S. monetary policy becomes ever more important for this asset class in general. Specifically, gold miners like Barrick have tremendous upside in a rising commodity price environment.

My five-year price target for gold still sits at US$10,000 per ounce, and I think this asset class will resume its upward trajectory soon. Gold has not been as effective of a hedge as history dictates. However, all assets revert toward a longer-term mean. In this context, gold miners like Barrick haven’t been this cheap in three decades.

Mr. Buffett is one of the greatest value investors of all time. If he’s picking Barrick Gold, it’s for a reason.

Buffett did sell some of his stake

It’s important to note that Berkshire did disclose in its recent quarterly report that the conglomerate sold a chunk of Barrick in the third quarter. This was a substantial sale, amounting to more than 40% of the position.

Some have speculated that his previous stance on gold overrode the decision-making authority he gave to his henchmen. Others believe the Barrick trade is over. The stock price has fallen more than 25% from its 52-week high, after all.

Bottom line

Barrick is a great diversification play for investors seeking defensiveness in their portfolios. This stock may underperform relative to other growth plays in the coming quarters. Over the longer term, however, I think a tremendous amount of value exists with this stock. In my view, long-term investors will do very well buying at these levels and holding for five years or more.

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 Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares) and recommends the following options: short January 2021 $200 puts on Berkshire Hathaway (B shares) and long January 2021 $200 calls on Berkshire Hathaway (B shares).

More on Metals and Mining Stocks

nugget gold
Metals and Mining Stocks

Bullish on Precious Metals? These Are Promising Gold Investments

Consider Agnico Eagle Mines (TSX:AEM) and another top mining stock to play the run in gold into 2025.

Read more »

Paper Canadian currency of various denominations
Metals and Mining Stocks

This Billionaire Is Selling Micron and Picking up This TSX Stock

Prem Watsa may have sold some Micron, but he's putting the funds towards something with even more growth potential.

Read more »

nugget gold
Metals and Mining Stocks

Must-Watch Gold Stocks Before Year-End

Gold prices have been going up for the better part of the year, and it is highly probable that this…

Read more »

construction workers talk on the job site
Metals and Mining Stocks

2 No-Brainer Mining Stocks to Buy With $200 Right Now

You can buy these top Canadian mining stocks with just a $200 investment right now to start your long-term wealth…

Read more »

Concept of multiple streams of income
Stocks for Beginners

Lock Up This 9.2% Dividend Yield From a Top Royalty Stock

Royalty stocks have a strong advantage when it comes to creating passive income for investors. But this one has the…

Read more »

Safety helmets and gloves hang from a rack on a mining site.
Metals and Mining Stocks

Is First Quantum Minerals Stock a Good Buy Right Now?

First Quantum is a TSX stock that trades 61% below all-time highs. However, the mining stock still trades at a…

Read more »

nugget gold
Metals and Mining Stocks

The Best Gold Stock to Invest $1,000 in Right Now

Here are two of the best Canadian gold stocks that can yield some eye-popping returns in the long run.

Read more »

nugget gold
Stocks for Beginners

The Ultimate Mining Stock to Buy With $1,000 Right Now

This mining stock just saw a drop, but don't let that keep you from diving in. This miner is due…

Read more »