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I buy cheap shares like Warren Buffett buys burgers!

first_imgI buy cheap shares like Warren Buffett buys burgers! Our 6 ‘Best Buys Now’ Shares Cliff D’Arcy | Saturday, 27th February, 2021 | More on: GSK ULVR Billionaire Warren Buffett is regarded as one of the world’s greatest investors. His folksy wisdom has entertained shareholders in his giant conglomerate, Berkshire Hathaway, for decades. Buffett’s advice on a wide range of topics has entered into modern folklore. As a value investor, I’m a huge fan of Buffett. I often look to him for advice on buying cheap shares. Here are two things the Oracle of Omaha has taught me about buying into businesses.1. Stock up on burgers (and cheap shares) when prices fallIn 1997, Buffett asked, “If you plan to eat hamburgers throughout your life and are not a cattle producer, should you wish for higher or lower prices for beef?” In other words, if one wants to buy shares, then one should be delighted when prices fall. Instead, many investors do the opposite: they sell at low prices and buy at high prices. Following Buffett’s advice, I’ve sworn off buying pricey US stocks. Instead, I’m trawling the FTSE 100 looking for ‘fallen angels’ (solid businesses with cheap shares).5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…For example, the share price of drug-maker GlaxoSmithKline (LSE: GSK) has declined for a year and more. On 24 January 2020, the GSK share price spiked to peak at 1,857p. On Friday, it closed at 1,191p, down 666p from this high. That’s a collapse of more than a third (35.9%) in 14 months. It’s also a 52-week low. Today, GSK shares trade on price-to-earnings ratio of 10.6 and an earnings yield of 9.4%. The 80p-a-share dividend equates to a dividend yield of 6.7% a year. But GSK plans to cut this dividend in 2021, as earnings might decline until 2024. Even so, I still see GSK as one of cheapest of cheap shares in the Footsie. Hence, I plan to buy more GSK shares for my family portfolio.2. Quality is worth paying for Another favourite Buffett quote is, “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price”. It’s worth paying premium prices to buy into exceptional businesses. But what if you could buy into a brilliant business with cheap shares?For instance, Unilever (LSE: GSK) is one of the British businesses I most admire. The Anglo-Dutch giant is a global Goliath at selling fast-moving consumer goods. Look in your cupboards and you might find several Unilever brands. That’s because these are among the most trusted and widely bought products in the world. Incredibly, 2.5bn people use Unilever products each day. In 2019, Unilever’s revenues were €52bn (£45bn). Who wouldn’t want a piece of that action? Yet, Unilever stock is creeping into ‘cheap shares’ territory.At its 52-week high on 14 October last year, the Unilever share price peaked at £49.44. Today, they are on sale at £37.33. That’s a discount of £12.11 a share — almost a quarter (24.5%) — from the 2020 high. To me, this sell-off smells like an opportunity to buy into a world-class business at a reduced price. Today, ULVR trades on a price-to-earnings ratio of 20.2 and an earnings yield of 5.0%. The dividend yield of 4% exceeds that on offer by the wider FTSE 100. In historic terms, these are lowly ratings for this global leader’s shares. But Unilever had bumper sales boost due to Covid-19  restrictions. Alas, this surge is unlikely to be repeated in 2021–22. Difficult economic conditions could also pressure Unilever’s profits. Nevertheless, Unilever’s cheap shares remain high on my buy list for 2021. I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! Simply click below to discover how you can take advantage of this. Image source: The Motley Fool Cliffdarcy owns shares of GlaxoSmithKline. The Motley Fool UK has recommended GlaxoSmithKline and Unilever. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. Enter Your Email Address See all posts by Cliff D’Arcy Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. “This Stock Could Be Like Buying Amazon in 1997”last_img read more