Restaurant Brands Stock: The Ultimate Reopening Play

Here’s why Restaurant Brands International (TSX:QSR)(NYSE:QSR) could be the best reopening play right now for long-term investors.

| More on:
Female friends enjoying their dessert together at a mall

Image source: Getty Images

The pandemic has ravaged the stock market over the past year. Yes, many sectors have since recovered nicely. Many stocks are now trading above pre-pandemic levels.

However, some stocks like Restaurant Brands International (TSX:QSR)(NYSE:QSR) still have a long ways to go to climb back to pre-pandemic highs. The stock is still down more than 25% from its pre-pandemic highs.

Here’s why I think Restaurant Brands could be the ultimate reopening play right now. After all, that’s a ton of upside that could be captured if things go back to normal.

Restaurant Brands more economically sensitive than peers

I think fellow Fool contributor Joey Frenette was spot on in a recent piece. He noted, “Moreover, the post-pandemic environment could be more kind to Restaurant Brands versus many of its peers, many of which have mostly (or fully) recovered from the 2020 coronavirus crash. As dining rooms open (for good this time!) and people get back to the daily routine of grabbing their daily double-doubles, I expect QSR stock could make a run for the $100 mark.”

I think this is certainly true. Particularly, in the case of Tim Hortons, Restaurant Brands has been a huge net loser as a result of the pandemic. Mass vaccinations are now spurring hope the economy could open sooner than expected. This is a big deal for Restaurant Brands shareholders.

I think Restaurant Brands’s core banners will continue to be hit hard in the near term. Revenue and earnings will likely be down for a few quarters. However, value investors looking for high-quality growth companies at a cheap price can’t go wrong with this stock. In my view, it’s approaching a level that’s too cheap to ignore right now.

Brand value can’t be ignored right now

Restaurant Brands’s three world-class banners are the real reason to own this stock long term. Investors can’t go wrong owning the holding company of Burger King, Tim Hortons, and Popeyes Louisiana Kitchen. Indeed, these companies are built for long-term growth. Opportunities internationally for new store openings, as well as domestic same-store sales growth, remain strong. This goes double in a fully reopened economy.

I agree with Frenette that investors may be discounting the power of Restaurant Brands’s core banners to far too great of a degree right now. Indeed, this could be a long-term mistake. Short-term thinking in today’s market has provided nice returns. However, over the long run, proven winners like Restaurant Brands will ultimately float to the top.

I’m focused on finding the best companies out there, with durable long-term moats. Restaurant Brands is one such company I think every investor should consider today.

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 Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool recommends RESTAURANT BRANDS INTERNATIONAL INC.

More on Dividend Stocks

Payday ringed on a calendar
Dividend Stocks

2 Reliable Dividend Stocks to Earn $191/Month in Passive Income

After a strong start to the year, the TSX is going through another downturn. At writing, the S&P/TSX Composite Index is …

Read more »

edit Sale sign, value, discount
Dividend Stocks

3 Top Dividend Stocks That You Can Buy Under $50

The global equity markets have turned volatile over the last few weeks amid the fear that the U.S. Federal Reserve …

Read more »

ETF chart stocks
Dividend Stocks

3 TSX ETFs to Buy for Big Dividends

Dividend-paying exchange-traded funds (ETFs) are excellent investment options for passive investors. Apart from instant diversification, would-be investors earn in two …

Read more »

grow dividends
Dividend Stocks

3 of the Best Dividend Growth Stocks That Money Can Buy

Long-term investing has several advantages, which is why so many well-known investors like Warren Buffett recommend it as a strategy. …

Read more »

investment research
Dividend Stocks

3 Cheap Canadian Stocks to Buy Now Before the Dividend Deadline!

Motley Fool investors have been searching high and low for safe stocks in this volatile market. The TSX today doesn’t …

Read more »

Glass piggy bank
Dividend Stocks

How to Accelerate Your TFSA Returns From Dividend Stocks

The stock market saw a correction in January, as investors booked profits ahead of the central bank’s interest rate hikes. The TSX …

Read more »

money cash dividends
Dividend Stocks

Top 3 Dividend Stocks in Canada for 2022

Canada is home to some of the best dividend stocks in the world. With finance, telecoms, and energy dominating the …

Read more »

calculate and analyze stock
Dividend Stocks

2 Top TSX Stocks to Put on Your TFSA Buy List

TFSA investors are searching for undervalued TSX stocks to buy that have the potential to deliver big gains in 2022. …

Read more »