Who thought September would see more of the same for the broad TSX -IndexThat now last week has risen by 2% and more than 6% in the past month. Undoubtedly, if you were shocked from the stocks, you missed an incredible run in the past that would probably be considered decent enough for the entire calendar year.
Anyway, the market timing remains a bad move, and although there are risks, I would try to use capital over time instead of waiting for the perfect moment. It would indeed be ideal to place a fixed amount in stocks after a correction. But with the inflation that lingers, I am too much money on the stand -I think, an underestimated risk disguised as caution for many younger investors who are better able to roll with their punches as soon as they inevitably come in their direction.
Anyway, for those who feel discouraged that they did not buy before the rally in September (I would imagine that many felt a bit hesitant in view of the scorching summer melts in shares), there are several catch -up games that still go for a pretty attractive multiple. And in this piece we will contain one name that I consider as still stuck in the TSX Bargain Bin.
Restaurant brands: A return of 3.9% to pick up if it tries to recover from a fall to 52 weeks of depths
Enter shares Restaurant Brands International (TSX: QSR), the fast food company that is best known because they are behind names such as Tim Hortons, Burger King and Popeye’s Louisiana Kitchen. Undoubtedly, the entire Quick-Serve restaurant industry has felt pressure in the midst of inflation and disputes consumer sentiment. Fastfood has indeed not been saved from the price increases, and although the value proposition becomes more difficult to communicate in today’s world after inflation, I think the damage to the fast food brands is now well exaggerated.
Inflation is cooling and there is a bit of a fierce battle to recover the casual restaurant. Could it evolve to more a price war? Potential. Anyway, menu innovation is another way that can get back on the restaurant brands and the wider industry.
Menu innovation and value are crucial to overcome headwind in the industry
Whether we are talking about Tim Hortons’ protein latts (my favorite new menu item!) Or the new seasonal Thanksgiving stack, an interesting sandwich with turkey, filling and cranberry, I think the hard-struck Canadian Café and Bake Shop will be on the right track. Since value and creativity seem to be the shopping traffic at Tim Hortons and his other brands, I think it is difficult to bet against people like a restaurant brands, who seems to act with a substantial discount, at least in my opinion.
The stock recently dropped to a lows of 52 weeks, but is now trying to regain some terrain. Time will learn whether there are enough catalysts to feed an outbreak. Personally, I think that the stock is far too cheap with 24.4 times reversing tests (p/e) for the quality dividend (3.9% yield) and given the potential for Tim Hortons to jump over a low expectation bar that was set for it after his heavy second quarter.
The Bottom Line
If you are looking for a cheap growing dividend, I think QSR shares are worth buying and holding for years, especially now that the expectations are in such a modest place.
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