The Motley Fool

The Best Stock to Buy Today: Restaurant Brands

Image source: Getty Images

Fast-food chains and restaurants found themselves among the fallout from the pandemic. Indeed, this fact surprised me, considering the relative buoyancy fast-food stocks have had in other crises.

That said, the corresponding drop in these companies’ stock price make such companies intriguing recovery plays today. Indeed, Restaurant Brands International (TSX:QSR)(NYSE:QSR) is on top of the list for many who expect the stock to break above the relatively narrow range this company’s traded in for some time later this year.

Here are some of the reasons why I think this stock should definitely be on investors’ watch lists today.

Long-term growth outlook remains optimistic

Among the company’s key banners, Tim Hortons was a banner that has provided a black mark for this stock for some time. Indeed, the underperformance of Restaurant Brands’s largest revenue driver has been noticeable in recent years.

That said, the pandemic has accelerated this banner’s underperformance. Pandemic-related restrictions have hit Tim Hortons harder than its quick-service peers. With no one going into the office and grabbing their Double-Double, it’s logical to understand why.

However, this unfortunate reality can be viewed positively by investors bullish on a near-term economic reopening. If a stampede back to the office does take place at some point later this year or early next year, Restaurant Brands’s immediate outlook looks a lot better. That’s to say nothing of the company’s continued rollout of its long-term growth plan in key growth markets such as Asia.

Additionally, I think it’s important to reiterate the optimism industry experts are portraying today. A recent projection by the National Restaurant Association of double-digit restaurant sales growth in North America in 2021 is very bullish indeed. This report combined with Restaurant Brands’s strong fundamentals make this stock very enticing today for growth-oriented investors.

Brand value remains a key moat for Restaurant Brands

It’s important to remember the Restaurant Brands is the conglomerate behind Tim Hortons, Burger King, and Popeyes Louisiana Kitchen. These banners are world renowned with a loyal global customer base. Indeed, these brands form the basis of the company’s durable competitive advantage, or moat.

I think these banners are pivotal with respect to Restaurant Brands’s international growth coming out of this pandemic. The company’s stock price is reflecting this sentiment thus far this year. Indeed, shares of QSR trade roughly 8% higher year to date, and I expect this momentum is likely to continue over the medium term as investors shift their portfolio allocation strategies toward defensive reopening plays.

Restaurant Brands’s management team has done a good job of upgrading its product offerings and revitalizing its infrastructure of late. I think these tweaks combined with a strong international growth strategy position the company well for growth long term.

Of course, the growth picture would look a lot less rosy without the company’s brands underpinning this thesis.

Like this top pick? Here are a few more to consider right now:

The 10 Best Stocks to Buy This Month

Renowned Canadian investor Iain Butler just named 10 stocks for Canadians to buy TODAY. So if you’re tired of reading about other people getting rich in the stock market, this might be a good day for you.
Because Motley Fool Canada is offering a full 65% off the list price of their top stock-picking service, plus a complete membership fee back guarantee on what you pay for the service. Simply click here to discover how you can take advantage of this.

Click Here to Learn More 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.

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.