Market Crash: 2 Canadian Stocks I’m Buying if Things Get Worse

I will be looking to buy Restaurant Brands International Inc. (TSX:QSR)(NYSE:QSR) and another stock if the market crashes further.

| More on:
TIMER SAYING TIME FOR ACTION

Image source: Getty Images

Keep your powder dry, because you’re going to need it that way if we’re not headed for a V-shaped recovery from this market crash. From a historical perspective, we’re still in the early innings of the bear market. As such, it’s vital to prepare a shopping list of Canadian stocks that you’d be willing to buy should they look to retest their March lows.

Here are three Canadian stocks that I’ve bought on the way down and will be looking to add should the market crash further.

Alimentation Couche-Tard

Alimentation Couche-Tard (TSX:ATD.B) is the epitome of a wonderful business that you’d want to own when we’re on the cusp of a recession. Management is poised to double profits in five years, and even if we’re hit with a long-lived economic downturn, I still think Couche-Tard is a must-buy at these dirt-cheap valuations.

As one of the rare consumer staples on the TSX Index, Couche-Tard is a great defensive way to ride out the coming economic downturn. The company is a global convenience store kingpin that will not see its sales fall off a cliff when the recession finally hits. And whenever the lights are dimmed on the economy and the market crashes, Couche has the liquidity in place to buy one or more of its poorly capitalized and operationally inefficient peers at a considerable discount to its intrinsic value.

Couche only acquires companies if there’s a high probability that substantial value will be created for its shareholders, taking into account integration risks and all the sort. As such, every deal made by Couche inspires a rally and not a pullback like with most other acquirers. With Couche, you know for sure that the company isn’t going to risk its neck by overpaying for an acquisition. If there’s no deep value to be had in a proposed deal, Couche will simply walk away, just like Warren Buffett would.

I see Couche as rising out of the market crash roaring, as it looks to scoop up distressed competitors (like Caltex) on the cheap. Given the calibre of defensive growth you’re getting from Couche, I find the stock’s 8.4 EV/EBITDA multiple making zero sense. To put it frankly, the stock is the closest thing to a  steal on the market today, and I’m going to continue adding to my position all the way down.

Restaurant Brands International

Restaurant Brands International (TSX:QSR)(NYSE:QSR) is a fast-food kingpin that’s in one of the most out-of-favour industries out there amid the pandemic market crash. Nobody is dining in at restaurants, and with people afraid to catch the insidious COVID-19, many consumers are wary of venturing outside to pick up their daily double-double.

The rise of the “stay-at-home” economy has been a disaster for the restaurant industries, but one has to think that these dark times won’t last forever. Restaurant Brands remains well equipped to continue riding out these tough times, and as society returns to normalcy, I’d look to the now severely undervalued Restaurant Brands stock to make a move to $100 and pick up where it left off late last year.

The challenges seem insurmountable for Restaurant Brands in the heat of the moment of a market crash. But if you’re betting on a return to normalcy, there’s a massive 5.3% yield for you to lock in alongside what could be outsized gains in an upside correction. I’ve been an aggressive buyer of QSR stock and welcome a retracement to March lows, so I can buy even more shares at an even higher yield.

Stay hungry. Stay Foolish.

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 ALIMENTATION COUCHE-TARD INC and RESTAURANT BRANDS INTERNATIONAL INC. The Motley Fool recommends ALIMENTATION COUCHE-TARD INC and RESTAURANT BRANDS INTERNATIONAL INC.

More on Dividend Stocks

thinking
Dividend Stocks

Should You Buy BCE Stock for its 8.6% Dividend Yield?

Down over 20% from all-time highs, BCE stock offers you a tasty dividend yield in 2024. But is the TSX…

Read more »

grow dividends
Dividend Stocks

How Long Would It Take to Turn $20,000 Into $100,000 With TSX Dividend Stocks?

Here's how high-quality TSX dividend stocks and the power of compound interest can help grow your investments by 400% or…

Read more »

Paper airplanes flying on blue sky with form of growing graph
Dividend Stocks

2 Soaring Stocks I’d Buy Now With No Hesitation

These two stocks may be the most expensive on the market, but they're high for a reason! And I'm still…

Read more »

Hour glass and calendar concept for time slipping away for important appointment date, schedule and deadline
Dividend Stocks

Invest $374.50 Each Month to Create Passive Income of $288 in 2024

Investing a specific amount each month to create passive income this year is possible with monthly dividend payers.

Read more »

Happy retirement
Dividend Stocks

2 Stocks to Help Turn $100,000 Into $1 Million

If you want to reach $1 million, $100,000 can certainly get you there. Even if you invest in some low…

Read more »

warning or alert
Dividend Stocks

Income Alert: These Stocks Just Raised Their Dividends

There's no shortage of companies that raised their dividends recently. Here's a trio of options to consider buying now.

Read more »

Business success with growing, rising charts and businessman in background
Dividend Stocks

Don’t Look Now, But These 3 TSX Stocks Look Poised for a Nice Rally 

Three TSX stocks are in a downtrend amid headwinds. 2024 may be rocky for them, but they are poised for…

Read more »

protect, safe, trust
Dividend Stocks

3 Safe Dividend Stocks to Beat Inflation

These three dividend stocks are excellent buys to beat inflation, given their solid underlying businesses and high yields.

Read more »