The stock market has rebounded sharply since the March lows, and the tech-heavy Nasdaq has never been so high. Therefore, it could seem that all the great buying opportunities have let us pass.
However, there are still some great stocks trading at attractive valuations from a long-term perspective, especially if you venture outside of the high-flying tech sector. With that in mind, here’s why Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) and Simon Property Group (NYSE: SPG) It must be on the radar of patient investors who are willing to overcome the ups and downs in the short term.
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Don’t be quick to give up on Buffett
It’s not like Berkshire Hathaway is underperforming in tough times. Berkshire’s portfolio of subsidiary businesses is largely recession resistant, filled with insurance companies, transportation, utilities, and other essential businesses. But that’s exactly what happened so far in 2020: Berkshire has lost 21% of its market value, compared to just a 4% drop in the S&P 500 to date.
The reason is that investors seem to be losing faith in Warren Buffett’s investment ability. Berkshire’s cash accumulation has grown for years, and many were greatly disappointed to see that Berkshire’s cash reserve not only increased to $ 137 billion at the end of the first quarter, but Buffett has truly been a network. seller from stocks. With so many very cheap shares, many shareholders (myself included) hoped that Buffett was finally able to put money to work.
With that said, I won’t give up on Buffett that fast. Until now there has been a lack of acquisition and great investment opportunities due to all the money that the government has been injecting into the economy. After all, why would a struggling company come to Buffett for financial help when the government will lend them virtually interest-free money? Once government support begins to run out, it could be another story. In short, Buffett has Never I had about this amount of dry powder to work with during a recession, and I’m still excited to see what you can do with it.
This mall operator could surprise the market
If you hesitate to invest in physical retail businesses right now, I can’t say I blame you. But I still think Simon Property Group is in a league of its own when it comes to physical retail sales, and it’s certainly worth taking a look at the retail price you’re trading for.
Simon is the largest operator of shopping malls in the United States, owning primarily large-scale, high-end shopping malls (malls with “Mills” in the name are Simon’s properties) and also has the largest market share for Outlet shopping with its brand Premium Outlets When the pandemic struck, Simon closed all of his properties, but things are going big.
Simon recently announced that he has reopened 97% of his shopping malls as of June 29 and expects 100% of his properties in the United States to be open by July 6. And, Simon’s tenants have reported higher-than-expected sales since his reopening.
The real reason to invest in Simon is that he aspires to be much more than a retail operator and has the cash to execute his vision. Simon’s goal is to gradually add mixed-use items to his shopping malls – think hotels, entertainment venues, offices, apartments, and other non-commercial items. This not only diversifies the company’s cash flow, but also creates natural foot traffic for its retail tenants.
While weaker mall operators may suffer as department stores and mall retailers struggle, Simon could gain market share and see his properties develop. plus productive. And at around half the price of its shares before the pandemic, now might be a good time for patient investors to examine these defeated real estate stocks.
Don’t expect a smooth ride
These are two well-run companies that have a lot of capital to get through tough times, but that doesn’t mean it will be an upward climb for investors. And if the coronavirus outbreak continues to worsen before it improves, all three (along with the stock market as a whole) could be under serious pressure.
However, both companies should work well in the long term. There is no reason to lose faith in Warren Buffett and his team as an investment manager, and there is no reason why Simon’s long-term vision of mixed-use properties cannot yet happen. Investors will just need to have a little patience along the way.
