Source: Andres Rueda, Fotopedia.
Why might Buffett be interested in Total System Services, Inc. (NYSE:TSS)? I think a big part of the answer lies in the fact that much of the world’s transactions are still being done in cash — 85%, according to Mastercard Inc (NYSE:MA) CFO Martina Hund-Mejean. That leaves literally decades’ worth of opportunity for Total System Services, Inc. (NYSE:TSS) to pick up payment processing and other credit service contracts.
Another factor that would sway heavily in TSS’s favor is that it’s been steadily increasing book value and boosting its dividend over the past decade. With TSS’s annual payout having quintupled since 2003, it could signal to a potential purchaser like Buffett just how sustainable the business model can be.
With nothing short of a depression set to weigh down TSS’s business model, it could make the perfect addition to Berkshire Hathaway Inc. (NYSE:BRK.A).
Admittedly, this is by far the most outrageous of the three because of the hefty $34 billion market value already attached to NextEra Energy, Inc. (NYSE:NEE) and its $28 billion in debt — but if anyone can do it, Buffett can!
I highly doubt you’ll see Berkshire Hathaway Inc. (NYSE:BRK.A) making any plays for an energy company so soon after taking the reins of NV Energy, Inc. (NYSE:NVE), but there isn’t an electric utility that speaks to sustainability more than NextEra Energy, Inc. (NYSE:NEE).
Source: Andreas Klinke Johannsen, Flickr.
Chosen as one of my selections to the Basic Needs Portfolio, NextEra Energy, Inc. (NYSE:NEE) is the leader in alternative-energy capacity in the United States. It recently surpassed 10,000 MW of wind-generating capacity and has been regularly contracting with U.S.-based First Solar, Inc. (NASDAQ:FSLR) to expand its solar-generating capacity. President Obama has made no secret that he plans to focus the U.S. on cleaner-burning alternative energies to reduce our reliance on foreign oil. No electric utility is better prepared for this transition than NextEra Energy, Inc. (NYSE:NEE).
NextEra also hits on all the key fundamental components Buffett would like to see, including a doubling in book value from $19 a share to $38 over the past decade, as well as 18 consecutive years of dividend increases. Being the most socially responsible of all electric utilities could really make NextEra Energy, Inc. (NYSE:NEE) stand out from the crowd when Buffett goes shopping in the future.
Do you have a company you think would be better suit for Buffett to buy? Tell me in the comments section below.
The article 3 Companies That Warren Buffett Should Buy Next originally appeared on Fool.com is written by Sean Williams.
Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.The Motley Fool owns shares of, and recommends, Berkshire Hathaway and MasterCard.
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