We came back from the Berkshire Hathaway
Berkshire is so large and spins off so much cash that it has no choice but to pour money into investments with high reinvestment needs. That formula may work in Berkshire's case, but as even Buffett himself has said, his ideal business is of the capital-light variety.
You deserve a serving of Buffett in your investing diet. These three stocks are fresh, never-been-pitched ideas in the mold of classic Buffett holdings.
To be clear, International Speedway isn't NASCAR. It's the owner of the tracks and the promoter of more than 100 annual races, dozens of which are in the NASCAR series. International Speedway makes money by selling tickets, concessions, and ad space and receiving royalties on its trademarks and television contracts. Controlled by the France family, which also owns privately held NASCAR, the company has a natural in with NASCAR. We like that management has a twofold financial incentive to make International Speedway's races as successful as possible.
The France family's iron grip on the company bears watching, of course, as does the company's ongoing record of racetrack safety. But with our pegging the shares at $42 per share on an economic rebound, making for an oddly symmetrical 42% upside, those are risks we'll happily take.
Like pandas, capital-light businesses with high switching costs are majestic, powerful, and refuse to mate in captivity. We have two such animals on our Inside Value scorecard,Microsoft
Fiserv, a market leader, helps keep banks, credit unions, and others in business by processing your money. Fiserv's 16,000 clients rely on the company's practically non-discretionary services. Think account and check processing, credit and debit card services, electronic transfers and bill payment, and more. Its position in electronic payments leaves the company sittin' pretty in a business primed for strong long-term growth thanks to more financial transactions taking place online.
Fiserv isn't without risk, of course. Tenacious competitors might start cutting prices aggressively, a security breach would also hurt Fiserv's reputation, and consolidation among its customers slightly diminishes Fiserv's pricing power. But our estimate of fair value is at about $66 a share, or 30% higher than its recent price.
Molson Coors Brewing
We love companies that sell brand-name, consumable products that people turn to in both good and bad times -- and Molson Coors Brewing
We value Molson Coors at $56 a share, which makes for about 25% upside from recent prices. There's some risk, of course. The industry is tightly regulated, and the competition in the global beer markets is nothing to shake your mug at. That said, Molson Coors has a healthy balance sheet, a track record of cost-cutting and execution, and enough scale to compete. With the stock offering 25% upside, a 2.2% dividend, plus potential emerging-market growth, this is one investment even the teetotaling Buffett would toast.