While the private-equity firm 3G Capital and Buffett’s Berkshire Hathaway have teamed up on a few headline deals (such as the acquisition of H.J. Heinz and the subsequent merger of Heinz and Kraft), their investment portfolios look a little different, writes Validea CEO John Reese in a recent article for The Globe and Mail.
The Berkshire portfolio is weighted heavily in stocks of consumer goods and companies (including a big bet on Apple), while 3G’s holdings include a substantial portion of energy, basic materials and telecommunication stocks. There are some overlaps, however. By looking at both portfolios, Reese identified some common themes. Using his guru-inspired stock screening models, he identified the following picks that score highly and “might be flying under the radar”:
- Canadian Pacific Railway (CP) is trading near its 52-week high, and the stock’s relative strength has been rising,
- Teck Resources (TECK) is a producer of zinc and other natural resources. The company is favored for its debt-equity ratio (which is far lower than the industry average), and earnings-per-share growth.
- Owens Corning (OC), an industrial name, makes glass fibre and composite materials and is a leading supplier to the construction supply sector. The company has been growing earnings over the last five years.
- General Motors (GM), the auto maker, is benefitting from lower fuel prices and appeals to income seekers with its solid dividend.
- Swedbank AB (SWDBY) is a Swedish financial with a modest price-earnings ratio and solid pre-tax margin.