Investing like Warren Buffett: the UK shares I’d buy and one I’d avoid

first_img Stuart Blair owns shares in Diageo, Mondi and Sage Group. The Motley Fool UK has recommended Diageo and Sage Group. 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. 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. See all posts by Stuart Blair 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. 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. “This Stock Could Be Like Buying Amazon in 1997” Investing like Warren Buffett: the UK shares I’d buy and one I’d avoid Enter Your Email Addresscenter_img Image source: 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. Warren Buffett is recognised as one of the best value investors in the world. This means that he looks for undervalued companies and buys them. Sounds very simple. Even so, when a stock is cheap, it doesn’t necessarily mean good value. A number of other factors must therefore be taken into account and Buffett has highlighted these factors on multiple occasions. The following UK shares are good examples of stocks I think Warren Buffett would like, and one he’d stay away from.Quality mattersAlthough Buffett looks for cheap shares, he also acknowledges the importance of quality. This is shown by his quote: “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price”.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…The first UK share that I think fits well with this quote is Diageo (LSE: DGE). The drinks company has used debt extremely effectively to make a number of shrewd acquisitions. Most recently this has included capitalising on low interest rates and issuing more debt to acquire Aviation Gin. This adds to the company’s enviable selection of different brands, further cementing it as a market leader. Although issuing too much debt can lead to severe problems, these acquisitions have been accompanied by rising profits. I therefore believe that the slight dip in both profits and the share price this year due to the pandemic offers a good time to “buy a wonderful company at a fair price”.Packaging company Mondi (LSE: MNDI) is another quality UK share. With the continued rise of e-commerce, packaging is big business. This should allow an innovative company like Mondi to continue growing profits, which have already risen to over £1bn. A price-to-earnings ratio of 12 represents a fair price to pay for such a quality company, I feel.Buying the dipBuffett also recognises that “the best thing that happens to us is when a great company gets into temporary trouble”. Although I wouldn’t say that Sage (LSE: SGE) is in trouble, its recent share price dip due to a fairly poor 2020 financial performance is still a worry. But this is what makes it a Buffett-type stock. Changes are already coming for the UK tech stock, and I think this “temporary trouble” makes it a great time to buy.The UK share I’d stay away fromCineworld (LSE: CINE) is certainly cheap. This is shown by a market cap of under £1bn, despite it being the second largest cinema chain in the world. Even so, cheap valuations don’t mean value and I think Cineworld is a good example of this. In fact, while I praised Diageo earlier for its use of debt, Cineworld’s debt-fuelled acquisitions have led to £6.1bn in borrowings, compared to shareholders’ equity of just £1.2bn. This represents a severe problem for a company that’s currently unprofitable.As a result, I don’t think Warren Buffett would buy this troubled UK share. His sale of airlines in 2020 demonstrates his views on many troubled industries and Cineworld is no different. This is one I’m staying away from! Stuart Blair | Tuesday, 5th January, 2021 Our 6 ‘Best Buys Now’ Shareslast_img

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