Judging by the current market temperament and surging interest rates, a growth-to-value rotation could be underway. In fact, I think such a rotation is likely to continue for some time.
Though it may be tempting to rid one’s portfolio of growth stocks, there may be reason to hold off on these impulses for now. Indeed, there are multiple growth stocks on TSX that continue to have tonnes of upside and could continue to outperform over the long run.
For those who believe this sentiment is transitory, here are three stocks to consider today.
Restaurant businesses continue to have a strong reopening thesis associated with them, and I don’t disagree with this logic. Accordingly, I think companies like Restaurant Brands (TSX:QSR)(NYSE:QSR) could be excellent picks for growth investors today.
Recently, Tim Hortons, a coffee-chain brand name under its banner, has been underperforming. This underperformance precedes the recent pandemic. However, Restaurant Brands’s management team is enacting a number of initiatives to right this ship. Menu innovation and an online focus are among the initiatives the company believes will get Tim Hortons on the right track.
Investors concerned about Restaurant Brands’s performance should remember that the company’s brand portfolio is not limited to just Tim Hortons. So, if you look past its performance, you will notice substantial growth in the business of other core names under its banner. Both Burger King and Popeyes Louisiana Kitchen have posted some pretty amazing results. And these banners are growing internationally at a rapid rate.
The past few years weren’t fruitful for Alimentation Couche-Tard (TSX:ATD.B). Pandemic-induced restrictions dented its core business operation severely. Accordingly, the stock has underperformed from expectations.
Regardless, I feel this stock has ample room to grow down the road, especially with a strong reopening setup. Its growth-by-acquisition strategy continues to serve long-term stakeholders favourably. However, missed opportunities like a failed bid for Carrefour have spooked investors who had high hopes for more deal flow of late.
Accordingly, the company is trading at a significantly discounted rate, making it extremely undervalued in this market. Of course, investors looking for a growth-at-reasonable price should consider this stock now more than ever.
Spin Master (TSX:TOY) is a company not many growth investors may consider outright. However, this stock is just that — a growth play in disguise.
This toy maker has moved heavily into digital gaming. The company’s Toca Life World app has taken off, providing Spin Master shareholders with some immense growth of late. In fact, the company’s digital gaming segment has grown over 400% year over year. This has coincided with some pretty impressive share price appreciation along the way for shareholders.
I think much of the same is likely on the horizon with Spin Master. This company could be one of the most overlooked growth stocks on the TSX today. Accordingly, I’d highly recommend long-term investors take a close look at TOY stock here.