The perennial underperformer that is the TSX Index has been a major winner this year; it’s now up an impressive 11.5% year to date. The tables have turned in a big way, and thanks to the return to value and a heating up of various commodities like copper and oil, the TSX could continue to flex its muscles well into 2021’s end.
In this piece, we’ll have a closer look at two of the best TSX stocks I’d look to buy for the rest of the year. With Canada winding down from its third wave of COVID-19, all sights will be set to the reopening plays, which could really start to shine as things return to normal.
Restaurant Brands International
Restaurant Brands International (TSX:QSR)(NYSE:QSR) is a fast-food behemoth behind such names as Tim Hortons, Popeyes Louisiana Chicken, and Burger King. Getting all chains moving in the right direction has proven to be a tough task for Restaurant Brands, even before the COVID-19 pandemic sent same-store sales comps nosediving.
Right now, Tim Hortons is struggling, while Popeyes, Restaurant Brands’s hottest but smallest chain by revenues, is shining. Things are lukewarm over at Burger King, which recently came off a quarter that saw flat comps numbers. Given COVID-19 lockdowns, flat is about the most anyone could ask for from the burger behemoth.
As the Canadian and U.S. economies reopen for the summer and vaccines stop a fourth major wave from hitting, Restaurant Brands stock could be in the clear, as it looks to ramp up its store modernization efforts and the next leg of its global expansion effort.
Undoubtedly, things could be finally looking up for the fast-food giant. But you’ll want to pick up some shares today while they’re still under pressure before any coming quarters reveal off-the-charts year-over-year comps. By then, you’ll have to pay more for less yield.
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MTY Food Group
Sticking with the fast-food theme, we have food court staple MTY Food Group (TSX:MTY), which crumbled like a paper bag when COVID-19 lockdowns first kicked in. The company has come roaring back off its March 2020 lows, yet shares still seem too cheap, given the likelihood of a more prosperous environment that could be in the cards as sooner as this summer.
The reopening thesis is pretty similar to that of Restaurant Brands. Once lockdowns are lifted, and people return to shopping malls in droves, they’ll inexorably hit up the food court, with MTY-owned chains like Taco Time that will be there to feed hungry shoppers, as they look to spend any savings built up through quarantines.
I think MTY is a great under-the-radar play and one of the best TSX stocks to buy for the rest of 2021. Given it’s more dependent on the elimination of the coronavirus, though, the name could be at greater risk of amplified downside should any COVID-19 variants of concern bring forth another wave of lockdowns.
MTY’s balance sheet also leaves a lot to be desired. Regardless, I think that the more vaccine shots in arms we’ll see, the lower the odds we’ll have to suffer through another extreme wave of COVID-19 like the one we’re winding down from right now.
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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 RESTAURANT BRANDS INTERNATIONAL INC. The Motley Fool owns shares of and recommends MTY Food Group. The Motley Fool recommends RESTAURANT BRANDS INTERNATIONAL INC.