4 Stocks Following Warren Buffett’s Profit Trail

We’re witnessing the end of an era in the investment world. 

After 83 years since buying his first stock, Warren Buffett announced he was stepping aside at the end of the year; it was an incredible run that solidified Buffett as one of the — if not THE — greatest investors in history. 

He even ended this illustrious run with a cherry on top after amassing a cash horde of $347.7 billion. While others grew greedy, he built his cash stockpile right up to the most recent market correction — a $347.7 billion inheritance for his successor. 

Not a bad position to be in, eh? 

There was no fight for succession, mind you. No quarrels amongst his caporegime inside the Berkshire family. In fact, we’ve known for four years who was going to take the helm when Warren stepped aside. 

His name is Greg Abel, and knowing his background gives us a key insight into where he’ll deploy that mountain of cash… or at least what’s left if Buffett decides to pull the trigger before we ring in the new year. 

You see, Berkshire has the perfect escape plan from this tumultuous market. 

Of the untold lessons that Warren Buffett has imparted upon the investment community, perhaps the strongest is: Invest in what you know!

This is the best piece of advice that individual investors like us can take advantage of the most — your “circle of competence” if you will. 

We’ve seen Buffett execute this philosophy time and again. When Warren started accumulating a strong position in Occidental Petroleum, it was connected all the way back to his very first trade in Cities Service in 1942; Occidental eventually acquired Cities Service forty years later. 

Uncle Warren held true to his philosophy till the end. 

Now that it’s time to pass the torch, there are a few clues that’ll lead to Berkshire’s next major move. 

I have a feeling you won’t be surprised that a small group of stocks are following Buffett’s profit trail. 

The Buffett Recipe For Success

Greg Abel’s first introduction into the Berkshire family came after Berkshire acquired its controlling interest in MidAmerican Energy roughly 17 years ago. That year, Greg became CEO of the company, which was later rebranded as Berkshire Hathaway Energy. 

In other words, the soon-to-be head of the $1.1 trillion valued nest-egg left to him by Warren Buffett, cut his teeth in the energy sector. 

But his ties to energy go far, far deeper than this; he was born and raised in what is arguably the most dominant oil and gas region in the world. 

No, I’m not talking about the Permian Basin, but rather a place that holds as much as 14 times the amount of proved reserves than the Permian. 

I’m referring to the Alberta oil sands. 

Having grown up in Alberta, Greg undoubtedly understands the importance of the bituminous sands in his northern home province. And if we’re to assume he’s just as cunning of an investor as Buffett, then we can also assume he can see why those Canadian oil stocks are so attractive right now. 

It all comes down to Buffett’s recipe for success. 

Push aside the price crash that took place in oil recently when OPEC+ announced it was raising output by 411,000 bbls/d in June. 

I’ll note that while the market was quick to jump on this headline, they neglected to also point out two things — first that the Saudis also increased their prices, which suggests that the demand picture is far healthier than what the media would lead us to believe, and secondly that it was probably appropriate to boost supplies during a time when global inventories are low. 

But, those points don’t exactly satisfy the thirst for drama that the media craves, do they?

Regardless of the action, the long-term in oil is even stronger than it was before. Remember, every day, week, and month that goes by for cheap oil, the further degradation we’ll see in future investment. 

At this point, I fully expect U.S. output to fall well below 13 million barrels per day if low crude prices persist. 

Well, so much for the energy dominance that the U.S. Energy Secretary Chris Wright is eager to experience. 

However, things are a little different in Canadian oil companies. They’ve been forced to weather the storm of cheap oil for so long, many of the best players in the sector have used that time to sharpen their balance sheets and plan for the future. 

Believe me, there’s no shortage of buyers for Canadian oil. 

Here in the U.S., we’re buying more Canadian barrels coming out of Alberta than ever before. That dependence will continue growing as President Trump starts tightening his grip on Venezuela’s oil exports through sanctions. 

Our refiners along the Gulf Coast will lose access to Venezuela’s heavy oil exports. The problem is that most of those refineries are specifically geared toward processing heavier grades of crude from Canada, not the light, sweet, Texas Tea that is extracted close by in the Permian Basin. 

Then we can’t ignore the China factor. The completion of the Trans Mountain Pipeline extension has given China access to the same Canadian crude that we’ve been buying hand-over-fist for decades. 

In fact, China has ramped up its purchases of Canadian oil this year, which is why tanker traffic in Canada is up nearly 60% year-over-year. 

One way or another, that Canadian oil is going to make its way into the market.

Greg Abel knows this all too well. 

Normally, that would be enough to pique his interest and keep the sector close on his radar. However, what seals the deal for the new Berkshire leader would be the incredibly attractive metrics found there. 

Those are the hidden investment gems that Uncle Warren can’t say no to… and you can check out four of them for yourself firsthand right here.