The Motley Fool

1 Top Canadian Stock That Just Got Too Cheap to Ignore

Image source: Getty Images.

Restaurant Brands International (TSX:QSR)(NYSE:QSR) is a top Canadian stock behind three legendary fast-food chains in Tim Hortons, Burger King, and Popeyes Louisiana Kitchen. As you’d imagine, the company has been in a world of pain during this pandemic. Dining room closures and a sub-par delivery platform have put the firm at a huge disadvantage to many of its peers in the fast-food scene who’ve been able to get by on takeout and mobile ordering.

Tim Hortons has been under the most pressure over this past year, with comps nosediving uncontrollably. The challenges at the iconic Canadian coffee and bake shop started well before the insidious coronavirus struck last year. Still, the pandemic certainly has been salt in the wounds of an already challenged company that struggled to live up to the expectations of Canadian consumers and investors.

Undoubtedly, many would be quick to conclude that the brand has been a complete flop, especially relative to the profound success that is Popeyes Louisiana Kitchen. That said, I still think it’s way too early to conclude that the iconic Canadian coffee chain can’t turn the ship around once this horrific pandemic is over.

If Restaurant Brands can turn Popeyes around, it can do the same with Tim Hortons

Criticize Restaurant Brands’s management if you will, but they’re the same folks behind the industry-moving success that was Popeyes’s legendary chicken sandwich.

They made Popeyes the best that it can be. As the chicken chain looks to expand its reach globally, you can expect Popeyes will gain more influence and continue leading the upward charge for the Canadian stock. Right now, Popeyes doesn’t make up a huge chunk of QSR pie. But it’s growing fast, and it would be a mistake to discount the chain’s international growth potential over the next decade. The chicken wars are just getting started, after all!

If Restaurant Brands can bring out the best in Popeyes, I’m sure they can do the same with Tim Hortons. It’ll just require a bit more time and the end of this pandemic, given a big chunk of Tim Hortons’s sales are derived from the daily routine that’s been drastically altered amid COVID-19 lockdowns.

The recent stay-at-home order for Ontario is going to hit Tim Hortons very hard. But looking beyond this third wave, we’ll have more vaccine jabs administered and could be poised a move towards normalcy. A more favourable environment in the second half could allow Tim Hortons to make up for lost time in the latter two quarters of 2021. If all goes well, the third and fourth quarters could see some incredibly strong year-over-year numbers.

5 Stocks Under $49 (FREE REPORT)

Click here to gain access!

Restaurant Brands: The most underrated Canadian stock?

Tim Hortons was a major sore spot for Restaurant Brands once again, with comps nosediving 14% for the quarter. The damage was offset by strength in Popeye’s and flat comps at Burger King, both of which were as much as you could ask for given the dire circumstances. With a tonne of turnaround potential and a bountiful dividend yielding north of 3%, Restaurant Brands is one of the least-appreciated reopening plays on the TSX. If you’re able to look beyond 2021, the Canadian stock, I believe, is way too cheap to ignore at just $82 and change.

Speaking of ample upside, you need to check out these following stocks curated by the team here at the Motley Fool Canada!

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 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.