Amid all the fuss around the August reporting season, I’ve picked out 3 stocks with the right mix of strong fundamentals and significant upside potential that even Warren Buffett may consider for 2020.
1. Infigen Energy Ltd (ASX: IFN)
The Aussie renewables group just had a strong showing in its most recent full-year results and could be set to surge higher in 2020.
Infigen reported underlying earnings up 11% on the prior corresponding period (pcp) to $165.3 million, while net revenue also climbed 9% higher to $229.3 million.
Most critically, purchase power agreement (PPA) volumes rocketed 20% higher to 489 gigawatt-hours (GWh) while renewable energy generation also climbed 20% higher to 1,775GWh.
Buffett has never been afraid of investing in companies with a strong upside in an emerging industry that have sound fundamentals and that’s what Infigen looks like to me.
Looking ahead to 2020, if Infigen can continue to deliver strong numbers I think its current $0.55 valuation could represent a bargain buy.
2. BHP Group Ltd (ASX: BHP)
The BHP share price has been hit hard by the recent escalation in the US–China trade war in August, falling 14% lower in the last 30 days.
However, I think BHP’s current $34.72 per share valuation could be a temporary dip, which represents a buying opportunity for speculative, value-based investors.
If and when the USA and China reach a resolution of sorts, the cloud hanging over Chinese demand for products should be lifted and I wouldn’t be surprised to see a strong rebound from BHP and its fellow Resources sector peers.
3. Coca-Cola Amatil (ASX: CCL)
Buffett is known for his love of physical goods and manufacturers, and I think Coca-Cola Amatil could fit the bill.
While the Coca-Cola share price hasn’t been on fire in 2019, it did reach a new 52-week high last week after reporting its full-year earnings.
Coca-Cola reported total revenue up 5% to $2,427 million while statutory net profit after tax (NPAT) shot 6.3% higher to $168 million.
Buffett has famously been a big investor in parent company Coca-Cola and I think the Aussie group may be a better bargain buy.
The company recently finalised the sale of troubled fruit and vegetable cannery SPC for $40 million and could be in good shape to turn its recent performance around.
Given the stock trades at an earnings multiple of 19x and offers investors a 4.4% dividend yield, I think Coca-Cola could make an attractive buy to the right portfolio.
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Motley Fool contributor Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Coca-Cola Amatil 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.