Warren Buffett’s investing philosophy believes in sticking with long term value, investing in what you understand and patience. Buffett also seems to possess a soft spot for consumer stocks such as his major holdings in Coca Cola and Kraft Heinz.
Here are four ASX 200 shares that I think would receive the tick of approval from the Oracle of Omaha, Warren Buffett.
Collins Food Ltd (ASX: CKF)
The Collins Food share price had fallen significantly after last week’s announcement of CEO Graham Maxwell’s retirement. Collins has been a strong, trending growth stock since its inception and bounced back strongly after last week’s announcement of its FY19 results.
Collins Food’s FY19 results saw the company continue to deliver strong earnings growth. This included revenue up 16.9% to $901.2 million and underlying NPAT up 15.7% to $45 million.
Collins continues to grow its KFC empire while consolidating its Sizzler business and rolling out Taco Bell Australia. Investors can expect relatively defensive growth while new restaurant openings contribute additional top-line growth.
A2 Milk Company Ltd (ASX: A2M)
The A2 Milk share price was battered earlier this month after the Australian Financial Review reported that China’s government has been planning new roles for the regulation of the baby formula sector.
In light of this news, the company addressed China’s E-Commerce announcement and said, “we welcome measures that protect the rights and safety of consumers and the overall integrity of E-commerce channels and will continue to work closely with our partners through this process.”
The company continues to invest strongly in marketing efforts while strengthening market share. I still regard A2 Milk as a growth machine and good value at current prices.
Tassal Group Limited (ASX: TGR)
The Tassal Group share price has been lingering around 52-week highs after pleasing HY19 results back in February. The company has diversified its operations through the acquisition of De Costi Seafoods in 2015 and the Fortune Group in 2018 – one of the largest footprint prawn farming bases in Australia. This allows the company to greater leverage the popularity of seafood alongside its traditional salmon-farming business.
The company trades at a conservative P/E ratio of 15 while experiencing a combination of favourable salmon market dynamics, improving base selling prices and an ability to further optimise its sales mix.
Freedom Foods Group Ltd (ASX: FNP)
The Freedom Foods share price has found some consolidation after the company announced a $130 million capital raising at $4.80 per new share.
A research note out of Goldman Sachs places the company as a “Buy” with a 12-month price target of $6.15. Freedom Foods is expected to grow strongly on the back of positive macro trends in healthier lifestyles and a rising China-Asia demand for dairy products and plant-based beverages. As a result, Goldman forecasts Freedom Foods to have a 44% 3-year EPS Compound Annual Growth Rate (CAGR) in FY18-21.
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Motley Fool contributor Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of A2 Milk. The Motley Fool Australia has recommended Collins Foods Limited and Freedom Foods Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.