Got $6,000? 2 Cheap Stocks to Buy for Your TFSA Right Now

Here’s two cheap stocks that could blow away growth estimates and set you up well in the long run.

| More on:

In volatile markets, it’s hard to put your latest $6,000 TFSA (Tax-Free Savings Account) contribution to work. The choppiness is enough to make any beginner investor uneasy. Though the stock market is sustaining a rally off its June 2022 lows, questions linger as to whether or not this is just another bull trap or bear bounce.

Bear markets tend to be less forgiving to new investors and dip buyers who expect immediate results. In any case, bear markets typically last an average of nine months. This current bear market is now more than seven months old. Indeed, the end of the bear flop could be in sight. Though a recession will certainly prolong this market sell-off.

In any case, I think the table is tilted slightly in favour of the bulls. I believe those who pick their spots can set themselves up very well for the long run. So, instead of waiting for a pullback in the TSX Index before putting your latest $6,000 TFSA amount to work, consider the following two stocks that currently look way too cheap to ignore.

Restaurant Brands International

Restaurant Brands International (TSX:QSR)(NYSE:QSR) may be one of the cheapest fast-food stocks out there. The firm owns Burger King, Popeye’s Chicken, Tim Hortons, and the lesser-known Firehouse Subs. With minimal product overlap and a world of growth opportunities, Restaurant Brands is a legendary roster of chains at a discounted multiple. The one knock against this stock may be its management. They’re relentless cost cutters, and they may have cut too deep in recent years. Certainly, strategic investments need to be made to unlock growth.

I think QSR’s managers have learned from their mistakes, as demonstrated by their commitment to invest in modernizing existing stores, with the adoption of new technologies.

On Thursday, the stock popped around 7%, as Q2 numbers blew away the estimates. Burger King comparable sales surged 10%, (18% of this growth came internationally), well above the 4% estimates.

Looking ahead to September, management will lay out its long-term plan to reinvigorate Burger King. I think it’s a very exciting time to be an owner of QSR’s beaten-down shares while management seeks to reawaken the appeal of its legendary brands. The stock trades at 4.2 times price-to-sales (P/S), below the 13.8 industry average. Further, the dividend yield (3.7%) is well above the industry average yield of 2.2%.

In short, QSR stock is relatively cheap, with a bigger yield, and room to run.

Canadian Tire

Canadian Tire (TSX:CTC.A) is a well-run retailer and one of Canada’s best known brands, perfect for any TFSA retirement fund. The stock yields a bountiful 3.83%, only slightly higher than the retail industry average. In addition to a large and growing retail footprint, it owns banner brands like Mark’s, Party City, and SportChek. It also operates gas stations across almost every province and territory, owns a large portion of its own REIT, and has a rapidly growing financial segment.

Indeed, a recession doesn’t bode well for retailers. Consumers will be stretched, and demand for discretionary (nice to have) goods will be on the downtrend. In any case, Canadian Tire seems to have too much recession fear baked in.

The stock trades at 8.9 times price-to-earnings (P/E), well below historical averages. Earnings are expected to wane gradually over the coming quarters. But that’s expected by the Street already. The real upside comes from Canadian Tire’s ability to leap past the low earnings bar set before it. Exceptional managers effectively navigated the retailer through the pandemic, and it continued to perform well. All things considered, I’d say this stock is a must-buy.

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 has positions in Restaurant Brands International Inc. The Motley Fool recommends Restaurant Brands International Inc.

More on Stocks for Beginners

A plant grows from coins.
Stocks for Beginners

Rebalancing Your Portfolio for 2025? 3 Growth Stocks to Consider

There's no shortage of great growth stocks to consider for your portfolio. Here's a look at three that could provide…

Read more »

A shopper makes purchases from an online store.
Tech Stocks

1 Canadian Stock Down 28% That’s Pure Long-Term Gold

If there's one strong stock investors should consider, it has to be this top notch tech stock making a comeback.

Read more »

Canadian dollars are printed
Dividend Stocks

1 Superior Canadian Dividend Stock Down 7% to Buy in Bulk

Just because stocks are down doesn't mean you should ignore them. This one, you should buy up in bulk.

Read more »

shopper buys items in bulk
Stocks for Beginners

3 Top Consumer Staples Sector Stocks for Canadian Investors in 2025

2025’s resilient stock picks: North West Company, Empire Company, and another consumer staples stock are blending growth, dividends, and unshakable…

Read more »

doctor uses telehealth
Dividend Stocks

This 7% Dividend Stock Pays Cash Every Month

Looking for passive income during this trying time? Consider this dividend stock for ultimate income.

Read more »

Canadian Red maple leaves seamless wallpaper pattern
Stocks for Beginners

Top Canadian Stocks to Buy Right Away With $2,000

These two stocks are strong options with completely different backgrounds.

Read more »

grow money, wealth build
Stocks for Beginners

TFSA: 5 Growth Stocks to Buy and Hold Forever

Here are five of the best Canadian growth stocks TFSA investors can buy now and hold forever.

Read more »

A plant grows from coins.
Dividend Stocks

Invest $15,000 in This Dividend Stock for $1,135 in Passive Income

Beyond regular income, dividend stocks can provide some strong returns as well!

Read more »