The recent market pullback has been harder to buy. The broader markets have been weak and trending lower for nearly six months. That’s a lot of pain dealt out over a rather lengthy timespan. Indeed, many dip buyers have likely grown accustomed to quick V-shaped recoveries like the one enjoyed in the early innings of 2020. The quick recession and bounce back was unprecedented, and it all happened in a few months.
These days, it seems like the bear market is dragging on, with no V-shaped spike in sight. Indeed, the Fed is serious about stomping inflation. And they don’t seem to care as much about recent losses in markets. That’s concerning. A so-called Fed put may be off the cards. And that has many investors reeling, opting to ditch stocks today, with the intention of asking questions later.
The Fed still has many more hikes to serve up. And investors could face steeper losses in the months ahead. Regardless, any dovish pivot, no matter how modest, could send stock markets right back into rally mode. So, if you give into fear today, with expectations that nothing positive can happen, you could run the risk of having to buy all your stocks back at much higher prices later down the road.
Nobody can time the markets. However, when it seems absolutely reckless to be bullish while every talking head on TV is yelling to sell, we could be closer to a bottom than you think. In any case, one thing is guaranteed: we’re closer to a bottom than we were back in January! With that in mind, it makes it easier to scoop up value plays today, as they sink on the back of horrid macro news.
Currently, I’m a big fan of Alimentation Couche-Tard (TSX:ATD), one of the best retail plays that have real value in their share today.
Couche-Tard is a profitable growth company that has a somewhat predictable earnings-growth stream. It’s a rare consumer staple on the TSX, but it’s a cheap one that U.S. investors may wish to consider, as the economy tilts into a recession.
Couche-Tard isn’t just a convenience store owner and operator. It’s a firm that’s ready to take the concept of convenience retail to the new age. With plenty of innovations going on behind the scenes, including frictionless payments, and margin-enhancing initiatives, the Couche-Tard-run stores of the future could be a heck of a lot more profitable than today. How? As electric vehicles (EVs) become the norm, consumers will spend more time at the convenience store. They’ll likely be willing to buy more and perhaps sit down and enjoy a coffee or hot meal.
Could the convenience store of the future include a restaurant and other intriguing grocery items? They could. In any case, Couche is more than ready to adapt. It’s making the right investments, and, in due time, they will pay off.
For now, the stock trades at a mere 15.9 times trailing earnings. That’s too cheap for such a competent earnings grower.