Prem Watsa Fans: The Billionaire’s Fairfax Companies Are a Great Value Today

Prem Watsa’s incredible comeback has helped Fairfax Financial Holding (TSX:FFH) enjoy a nearly 600% gain off those 2020 lows. And if you missed the move, you might be wondering why it’s even worth bothering to look at the insurance and holding company run by the legendary Mr. Watsa, a man who’s perhaps better known as the Canadian Warren Buffett.

Undoubtedly, Watsa’s performance warrants the nickname, at least in my opinion. Despite the hot run, I still think there’s plenty of reason to invest in Watsa, not just through the flagship Fairfax Financial Holdings, which is now a $53.7 billion company, but through one of the other Fairfax firms, many of which can provide emerging growth to go with Prem Watsa’s exceptional ability to spot value.

Fairfax India might be worth a look on weakness

Take shares of Fairfax India Holdings (TSX:FIH.U), which is fresh off a nearly 22% plunge from its highs. Undoubtedly, investing in India’s emerging market can prove tricky, especially if you don’t keep up to date on developments. Either way, there’s ample growth to be had in the market, and Fairfax India Holdings is a great place to diversify if you want emerging growth.

The $2.1 billion name is coming off a tough recent quarter, thanks in part to currency headwinds and other pressures that have weighed heavily on its investment portfolios. Either way, I like the longer-term trajectory and would consider nibbling into weakness if you’re serious about expanding your horizons beyond Canada and the U.S.

For most investors, I think sticking with Fairfax Financial Holdings is a better way to go. The shares remain dirt-cheap at 8.2 times trailing price-to-earnings (P/E). In numerous prior pieces, I highlighted the single-digit P/E as a top reason why FFH is a table pounder despite the past-year run.

And with a 0.51 beta, FFH stock might be able to take on less damage if the stock market were to be hit with a bear market, courtesy of sinking valuations in the tech and AI trades. While FFH shares have been turbulent for the last six months, I do see the potential for a breakout going into the new year.

FFH stock remains attractively valued before a breakout has a chance to happen

Indeed, Fairfax has made smart investments, but its dry powder still remains quite dry. As the firm looks for more undervalued acquisitions, my guess is that the Fairfax uprising will be tough to stop. Either way, I wouldn’t want to bet against the firm as it continues to make up for lost time. The big question moving forward, of course, will be if Watsa can still keep the needle-moving deals coming in as Fairfax matures and the market cap swells.

Another doubling would send the firm above the $100 billion market cap level. And, as you may know, it gets harder to drive shares higher with smaller-scale deals, even when a solid price of admission is achieved. Either way, I think Fairfax is quickly becoming one of those must-own Canadian stocks. As shares consolidate into 2026, perhaps looking to buy on a breakout above $2,520 could be the way to go. Either way, I’m not against nibbling on a few shares or just a single one here at $2,400 or so. The share price is hefty, but the P/E is certainly not!

The post Prem Watsa Fans: The Billionaire’s Fairfax Companies Are a Great Value Today appeared first on The Motley Fool Canada.

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Fool contributor Joey Frenette has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Fairfax Financial. The Motley Fool has a disclosure policy.