Warren Buffett has been on the move lately, preparing for the inevitable: a market crash. There are likely to be quite a few in the New Year, even as soon as mid-January. So, it’s why the Oracle (NYSE:ORCL) of Omaha is trying to get ahead of it, buying stocks to see through a pandemic, and, of course, selling those that won’t.
During a recent report of what Buffett bought and sold, you get a look at some themes. So, let’s take a look at some TSX stocks that might equate to ones Buffett would get rid of before a crash.
Big TV There are far fewer companies in Canada than there are in the United States when it comes to telecommunications. Overall, that means these companies are fairly diverse and competitive. However, for companies that are focused more on television, Warren Buffett might recommend selling.
One example would be Shaw Communications. The company is still down about 11%, while other companies are taking advantage of the Santa Claus Rally. Revenue has grown by merely 1% during a time where others are seeing a surge in business. With another market crash on the way, it might be time to cut and run from this stock for a while.
Regional banks Banks as a whole are a good investment. Canada’s Big Six Banks fared as some of the best in the world during the last recession and have been strong investments, even right now with a pandemic and market crash to handle. However, regional banks haven’t been so lucky.
A perfect example would be Canadian Western Bank (TSX:CWB). The company continues to see revenue come in lower and lower; it most recently had a year-over-year increase of only 0.17%. Total debt is now at $2.5 billion, and shares are down almost 10% as of writing. Even with a 4.01% dividend yield, right now it’s simply not worth investing in this stock.
But also, banks I know I’m sounding contradictory, but banks as a whole definitely are a good investment. However, ahead of a market crash, Warren Buffett has been reducing stakes in large banks. Why? To buy them back cheap, of course!
Now might be a good time to do something similar. Take your profits from larger banks that have been trading around pre-crash levels. Then when there’s a crash, don’t wait for a market bottom. Simply buy up a stake and wait for huge returns! A great option is Royal Bank of Canada, Canada’s largest bank, which has been making serious headway lately. Shares are up 3.5% from one year ago, after falling like a stone during the crash. If that happens again, it’ll be a great time to pick up Canada’s largest bank.
Bottom line It’s a great time to start taking profits and an even better time to start making a watch list. There is going to be a crash, and you don’t want to get blindsided. So, start selling the stocks that won’t see you through a crash, and start preparing for the ones that will. Take it from Warren Buffett, who’s been around the block once or twice.
The post 3 TSX Stocks Warren Buffett Would Sell Right Now appeared first on The Motley Fool Canada.
Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned.
The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool Canada’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Motley Fool Canada 2020
This Article Was First Published on The Motley Fool
