Image source: The Motley Fool
Billionaire investor Warren Buffett does not have much exposure to the UK stock market. And he doesn't really need to offer good investment opportunities in the US market today.
However, there are plenty of Buffett-style stocks in the UK's FTSE 100 index. Here are two looks I have in my portfolio that I feel should be looked at now.
A great wealth generator
First of all Rightmove (LSE: RMV). It operates the UK's largest property portal.
Rightmove will tick a few boxes for Buffett, I feel. He likes to invest in quality businesses and this company has a strong product (hence a broad source), a high return on capital (profit rate), and a good long-term track record when it comes to generating wealth. shareholders.
At today's share price, I think there is fair value on offer here. And apparently I'm not the only one with this opinion. Last month, the Australian rival REA group tried to buy a British company. Unfortunately, the two businesses could not agree on a price.
Looking ahead, I expect Rightmove's share price to rise as the company's revenue and profits increase. Valuations look very reasonable today (the forward price-to-earnings (P/E) ratio is just 21) so I see plenty of upside potential. It's worth noting that analysts at Berenberg have a price target of 775p. That's about 25% higher than the current share price.
In terms of risks, one should note that competition in the UK property search space is increasing. Today, Rightmove competes with OnTheMarket (recently bought by a large US company), Zoopla, Your Move, and others.
I like the risk/reward proposition at current levels though. In my mind, this internet company is not that important right now.
Without being loved
Insurance is one of Buffett's favorite sectors and my favorite stock in the sector today is no exception Prudential (LSE: PRU). It is mainly focused on the Asian and African markets which are growing well these days.
Now, Buffett likes to buy stocks when they are out of favor. And this stock fits the bill here. Due to China's recent economic problems, the stock price has fallen significantly. Last year, it was down more than 20%.
I think there is potential for a rebound in the not too distant future. Currently, China is strongly pulling stimulus from its economy. This should improve Prudential's business conditions. And in the long run, markets across Asia and Africa – largely untapped when it comes to insurance and savings accounts – should provide the company with significant growth.
Another thing to mention here is that the company is buying back a lot of its own shares. This should increase earnings per share over time (and share price).
Of course, if China's economy slows further, the rebound in share price will be delayed. Taking a long-term view (Buffett likes to hold stocks for decades) however, I think this stock will do well.
Currently, the P/E ratio here is nine, so the stock is cheap.
Source link
