The Motley Fool

2 Must-Buy Stocks That Remain “Steals” Amid the Market Rebound

Image source: Getty Images

The only thing more shocking than the coronavirus-driven crash was the historic three-day market rebound that brought the TSX Index up a whopping 20% from its bottom. If you tried to time your entry and exit from the markets, you might have missed the pop, and you may be looking to rush back into stocks before things go back to normal. While I can’t tell you whether or not the recent rally is sustainable or another dead cat’s bounce, I can tell you that the Canadian market is still abundant in value opportunities for long-term investors.

Still plenty of value out there

Don’t go all-in on stocks here just in case we retest the lows. But do start putting some cash to work if you’ve yet to do so. Chasing the market is a fool’s (that’s a lower-case f) game, as panic evolves into the fear of missing out (FOMO). Still, if you pick your spots carefully and nibble on the way up during this market rebound as you would on the way down, you can prudently snag a bargain. Although the bargains on Monday were much, much better, the scent of value is still in the air.

This piece will have a look at two stocks that are still substantially priced below my intrinsic value estimates. Without further ado, consider Restaurant Brands International (TSX:QSR)(NYSE:QSR) and Lightspeed POS (TSX:LSPD).

5 Stocks Under $49 (FREE REPORT)

Click here to gain access!

Restaurant Brands International: Well positioned for a market rebound

Restaurants are being shuttered amid the coronavirus crisis. Restaurant Brands is going to suffer a material hit to upcoming quarters, and the stock has been punished accordingly, with shares nosediving 55% from peak to trough this year, after treading water following company-specific issues relating to sluggish comps at Tim Hortons, one of the company’s three powerful brands.

Restaurant Brands isn’t going anywhere. The company is still well capitalized, and it’s going to come roaring back when this pandemic is gone, even if it leaves behind a nasty recession. You see, a recession is a time when fast-food firms like Restaurant Brands can thrive. The company sells “inferior” goods, and when consumers tighten the belt, the demand for such goods will stand to rise, as the consumer spending slides.

The company sported a dividend yield near the 7% mark at the bottom — a time when I was pounding the table on the stock. Shares of QSR have since rocketed 50% off the bottom in conjunction with the market rebound, but I still see compelling value to be had from a stock I believe is worth $100.

Collect the 4.7% yield and hold onto the stock, as it recovers from one of the worst economic shocks in history.

Lightspeed POS: An unfairly hit stock that could skyrocket in a market rebound

Lightspeed stock go walloped this year, falling 74% from peak to trough (the stock has almost halved twice!). The commerce-enabling firm relies on the success of small- and medium-sized businesses for their growth, so it’s understandable why investors were bearish on Lightspeed amid the coronavirus crisis. The company provides invaluable services to small- and medium-sized retail and restaurant businesses, which are among the most vulnerable of firms these days.

Many businesses have closed their doors, are becoming less liquid by the day, and could be on the cusp of bankruptcy. And while the impact will hit Lightspeed hard, one must remember that this pandemic will pass, even if there are casualties. Once things normalize and social distancing is no longer a recommendation of the federal government, people will gradually return to restaurants and retail shops. And the demand for Lightspeed’s services will bounce back. As for Lightspeed’s stock, I suspect it could bounce back a lot quicker, potentially at the speed of light.

The damage is overdone on this promising growth stock. So, if you’re in the market for hyper-growth at a decent multiple, I’d nab Lightspeed shares, as they look to recover ground amid the market rebound.

Just Released! 5 Stocks Under $49 (FREE REPORT)

Motley Fool Canada's market-beating team has just released a brand-new FREE report revealing 5 "dirt cheap" stocks that you can buy today for under $49 a share.
Our team thinks these 5 stocks are critically undervalued, but more importantly, could potentially make Canadian investors who act quickly a fortune.
Don't miss out! Simply click the link below to grab your free copy and discover all 5 of these stocks now.

Claim your FREE 5-stock report now!

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Joey Frenette owns shares of RESTAURANT BRANDS INTERNATIONAL INC. The Motley Fool owns shares of Lightspeed POS Inc. The Motley Fool recommends RESTAURANT BRANDS INTERNATIONAL INC.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss an important event.

Iain Butler and the Stock Advisor Canada team only publish their new “buy alerts” twice a month, and only to an exclusively small group.

This is your chance to get in early on what could prove to be very special investment advice.

Enter your email address below to get started now, and join the other thousands of Canadians who have already signed up for their chance to get the market-beating advice from Stock Advisor Canada.