Legendary value investor Warren Buffett used to hold two Canadian stocks dearly for years and had a position in a Canadian gold producer. Restaurant Brands International (TSX:QSR), Suncor Energy (TSX:SU), and Barrick Gold (TSX:ABX) are underrated today, because Buffett no longer owns shares. Nonetheless, they are smart buys right now.
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Strong system-wide sales growth
Mr. Buffett helped RBI financially when Burger King bought and took over Tim Hortons in 2014. However, the lockdowns in 2020 prompted him to sell his stakes in the second quarter (Q2). Fast forward to 2023, and without the GOAT (greatest of all time) of investing, the quick-service restaurant company reported impressive results due to strong business momentum.
In Q2 2023, total revenue and net income increased 8.3% and 1.4% to US$1.77 billion and US$351 million versus Q2 2022. System-wide sales rose 14% year over year (over $40 billion in the last 12 months).
RBI’s chief executive officer (CEO) Josh Kobza credits the positive momentum to the new menu innovations in the iconic brands and successful marketing campaigns and operations. Besides the top-line strength and sustained profitability, RBI surpassed the 30,000-restaurant mark globally.
At $98.17 per share, the restaurant stock is up 13.93% year to date and 37.1% higher than on June 30, 2020. Current investors partake in the 2.99% dividend yield.
Oil bellwether
Buffett’s initial position in Suncor Energy was in Q2 2013, then gradually increased his holdings via eight transactions until Q2 2020. His conglomerate Berkshire Hathaway sold the remaining shares in Q1 2021. The Canadian oil bellwether trades at $42.66 per share (+1.82% year to date), or 79% higher since Buffett left. It also pays an attractive 4.88% dividend (two dividend hikes in 2022).
The $55.87 billion integrated energy company is back on investors’ radars following the resounding comeback from the 2020 oil slump. Suncor produces energy from various sources, such as oil sands and renewable fuels. Besides the integrated footprint, the oil sands assets have no exploration risks.
Suncor is also active in the electric vehicle (EV) market through Petro Canada. The fuel retailer opened Canada’s Electric Highway in 2019 and owns an extensive network of EV fast-charging stations.
Best asset base
Buffett dislikes gold but held Barrick Gold briefly for two quarters in 2020. The $39.9 billion Canadian mining company is a tie-one gold producer with a growing exposure to copper. Its president and CEO Mark Bristow said, “Our asset base is the best in the business, and it gives us a platform from which we can clearly see and plan for the future.”
Barrick Gold is a strong buy despite lower top and bottom-line figures in the most recent quarter. In the three months ended June 30, 2023, sales and net income declined 0.9% and 35.7% to US$2.83 billion and US$305 million versus Q2 2022.
According to Bristow, Barrick is on track to building the world’s most valued gold and copper mining company. He added, “We have the strategy, the means and the motivation to achieve that.” If you invest today ($22.73 per share), the dividend yield is 2.71%.
High-profile investments
Many people were surprised that Buffett sold his high-profile stock investments in Canada. The companies have shown resiliency since the coronavirus breakout. Dividend earners love RBI, Suncor Energy, and Barrick Gold for the rock-steady quarterly payouts.
