Ever since the abrupt April 2020 bounce those ominous March 2020 lows, we’ve heard pundits saying things like the dire economic reality will once again take hold and stocks will correct, even after the U.S. Fed stepped in to save the day. If you listened up, you missed out on a generational opportunity to load up on some of the best bargains we’ve seen in decades.
Upside risks and downside risks: Balance both so you don’t miss the bargains
Call it the most hated rally, if you will, but gains are gains. And if you’re going to time the markets by selling your stocks in anticipation of the next market correction, you’ll bear considerable upside risks (the risks of missing upside by standing on the sidelines). Upside risks are arguably worse than downside risks if you’re a young investor looking to stay ahead of inflation.
So, if you’re ready to spend more time in the market than on the sidelines, consider joining me in the following three Canadian stocks that I recently bought more of on the latest bout of weakness.
Restaurant Brands International
Across all its chains, the firm has had mixed success.
Tim Hortons hasn’t lived up to expectations. Same-store sales (SSS) comps were sluggish, even before the COVID-19 pandemic struck. The iconic Canadian king of the Double-Double has been ice cold, as management has failed to find a spot with Canadians. It would be foolish to discount the turnaround potential in the post-COVID environment, though. A turnaround could be brewing soon, and I think the brand is powerful enough to get back on its feet after years of dragging down QSR stock.
Burger King has been far more successful than Tim Hortons in recent years, but it hasn’t been all it can be. With a fresh, new logo (old is new!) and modernized restaurants on the way, I think the burger giant could explode. And once it does, you can be sure that QSR will serve up a whopper of a dividend increase.
Of QSR’s brands, Tim Hortons is ice cold, Burger King is mild, and Popeyes is scorching hot. Popeyes has really reinvented itself with menu items like the incredible chicken sandwich and, most recently, its delicious flounder sandwich. The former menu item isn’t just a home run for QSR; its success has profoundly impacted the fast-food world. And if the brilliant managers can replicate Popeyes’s success across its other two banners while continuing to expand Popeyes at the international level, then QSR stock is a bargain that could more than double over the next two years.
Bank of Montreal
Never bet against the Canadian banks, especially not Bank of Montreal (TSX:BMO)(NYSE:BMO), a name that was widely viewed as the most at-risk bank amid the worst of the COVID-19 pandemic. I started accumulating shares back in March 2020, and I’ve been steadily adding my position all the way up. Today, BMO stock is sitting at an all-time high, climbing back from the depths of March 2020.
BMO, which had more than its fair share of corporate loans and oil and gas exposure, was under profound pressure last year. Today, oil is soaring above US$63, and the concerns surrounding BMO stock proved to be overblown beyond proportion. With headwinds turning to tailwinds and the possibility of rising rates over the next two years, BMO stock is still undervalued and is a great pick for those who aren’t ready for the early innings of this bull market.
With concerns growing about the possibility of a Canadian housing market crash, BMO is the Canadian bank to bet on, as it has far less risky mortgages in its book than some of its Big Six brothers. Even at $114 and change, BMO stock is a relative bargain when you weigh the environment that lies ahead and the strength in its wealth management business.
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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 BANK OF MONTREAL and RESTAURANT BRANDS INTERNATIONAL INC. The Motley Fool recommends RESTAURANT BRANDS INTERNATIONAL INC.