Don’t think that there’s a shortage of value out there just because you missed the chance to catch the 5% or so dip this October. Sure, on average, many TSX stocks have all but recovered from the turbulent past few months. That said, not all stocks bounced back to the same extent. In fact, some high-quality TSX stocks actually proceeded to sag even lower, even as broader markets trended higher. It’s these such oversold stocks that I think represent some of the best bargains on the TSX Index today.
Without further ado, please consider shares of Restaurant Brands International (TSX: QSR)(NYSE: QSR), which is fresh off a plunge to its 52-week lows of around $70, and Fairfax Financial Holdings (TSX: FFH), still down over 6% off its 52-week high.
Restaurant Brands International
Restaurant Brands International is the Canadian firm behind such names as Popeyes Louisiana Kitchen, Tim Hortons, and Burger King. As the fast-food industry rebounded from a horrific 2020 and 2021, QSR has continued dragging its feet, even as some better-performers within the industry soared in spite of the industry headwinds. Labour shortages, which hurt QSR’s latest quarter, are not unique to it. And although such COVID-related issues are transitory in nature, investors are quickly losing patience with the name. The selling pressure has been quite pronounced. And it’s probably overdone here.
The management team could have done a better job mitigating COVID issues as its peers have done. But does the stock deserve to be pummelled so hard given the calibre of its quick-serve restaurant trio? I’d argue not. Three legendary brands will eventually recover, making QSR one of the best reopening value stocks to check out here.
Restaurant Brands has a very strong global growth profile, which, in time, will be better appreciated by investors, likely after the pandemic ends. For now, look to QSR to address its labour shortage. Heading into next year, the stage could be set for a glorious rebound, as QSR arguably has the most to gain as industry conditions normalize and the COVID pandemic goes endemic.
I think Pfizer’s latest oral treatment was a major reason QSR was up nearly 3% on Friday. I think the single-day bounce is just an appetizer of the main course that contrarians will be treated to heading nto year-end.
Fairfax Financial Holdings
Fairfax Financial Holdings popped nearly 6% on Friday on a big “up” day for broader markets. Despite the pop, Prem Watsa’s underperforming insurance and holding company trades at a very steep discount.
The stock finds itself down 16% over the past five years, and shares have still yet to recover from the 2020 stock market crash. This will change, and the elimination of the coronavirus will help Prem Watsa’s firm turn the ship around. Underwriting is slowly getting better with time, a trend that should help the stock break out to a new high, all while COVID comes to an end.
The stock trades at a mere 0.5 times sales and 4.1 times trailing earnings. That’s ridiculously cheap for the type of exceptional management you’re getting. With a 2.5% yield, I think FFH is a great play for a wide range of investment styles. Whether you need income, growth, deep value, or a timely bounce-back candidate, FFH stock fits the bill at $538.
