It’s always a good idea for investors to keep a list of U.S. or Canadian stocks on their radar. That way, when volatility strikes, you’ll be ready to take advantage of the names that you wanted to own at a price you’re now more willing to pay. Undoubtedly, waiting for some of your favourite pricey businesses to fall back to a valuation that’d make it a buy can be tough. You could be waiting for many months, if not years. Whenever a broader market selloff strikes, such high-quality businesses tend to act as babies that have been thrown out with the bathwater. And as shares of the name on your radar plunge, it’s vital not to panic and lower the bar on a name that you told yourself you would have purchased.
When the time comes, and a name on your radar goes on sale, it’s painful to actually hit that buy button. But to achieve market-beating results, you must be a buyer as other look to sell. As the famous Warren Buffett quote goes, “be greedy when others are fearful and fearful when others are greedy.”
Right now, greed is slowly turning into unease. With odds of a correction rising by the day, investors need to gather at least a few Canadian stocks with prices they’d be willing to buy at, because the return of seasonal weakness may bring forth great entry points for patient, disciplined investors.
Consider two of the best names on my personal radar right now. Restaurant Brands International (TSX:QSR)(NYSE:QSR) is one name I’d love to pick up at lower prices. If the next correction happens over the coming weeks and months, as some pundits believe, I’d be inclined to be a buyer on the way down.
Restaurant Brands makes a strong case for why it could be one of Canada’s most robust future Dividend Aristocrats. The company owns three of the most respected brands in the fast-food world in Popeyes, Burger King, and Tim Hortons. Each company was dealt a major hit during last year’s lockdowns. Still, the pressure was not enough to jeopardize the company’s very handsome dividend, currently yielding just over 3.3%.
Undoubtedly, fast food is a defensive, recession-resilient place to put your wealth. And a pandemic, which put fast-food restaurants directly in their crosshairs, is a true test of resilience. Restaurant Brands didn’t shine in 2020 by any means. But it made it through with its dividend in one piece. That’s a win in my books. As shares lag and potentially drop below $80, I’d look to be an aggressive buyer.
The Canadian stock already represents a sizeable chunk of my portfolio, but on further weakness, I’d have no problem adding to my already large position. I think it’s that great of a business. Although I view shares as undervalued today, I would like it even more if shares were a steal. Given COVID-19 risks, I wouldn’t rule out such a steal from happening in the next market correction.
Falling knives aren’t easy to catch. They’re not supposed to be. Otherwise, achieving results better than the markets would be easy. So, it’s vital to buy gradually over time, rather than trying to time your entire entry at one instance, a time you think the bottom is in. Catching a bottom is nearly impossible, and it can cause you to miss a sale on your favourite stock.