For beginner investors, it’s so tempting to wait out the recent surge in volatility. Central banks are raising rates, and they’re willing to put up with some economic damage. At this juncture, investors are wondering just how much pain the Federal Reserve is willing to inflict before taking on a more dovish pivot. Until inflation shows signs of really cooling off, I don’t think the Fed or Bank of Canada will comfort investors with chatter about rate cuts following the hikes. At the end of the day, it’s all about beating inflation. And talk of rate cuts, while central banks are in the midst of a hiking cycle, seems to be putting the cart before the horse.
Indeed, it’s hard to avoid the jitters about the Fed, rate hikes, and inflation. That said, a recession does not have to be a repeat of 2008. Many beginners don’t know what a recession (apart from the short-lived 2020 coronavirus recession) is or what it entails on markets. The closest historical comparable is the one that struck during the Great Financial Crisis.
Making money in a recession doesn’t have to be hard
The Great Financial Crisis was a doozy, and one of the worst meltdowns since the Great Depression. Still, many investors are forgetting that a recession does not have to make the record books. We’ve grown all too familiar with horrific downturns. But things may not be nearly as bad as they seem for beginner investors willing to put up with another 18 months of volatility for a shot at life-changing gains over the next 18 years and beyond.
It feels foolish (lowercase f) to get greedy now. But come the year’s end, you may be hard on yourself for not having bought while most others on the Street sold.
Instead of focusing on the road ahead, focus on the destination. Your Tax-Free Savings Account (TFSA) retirement fund can grow by leaps and bounds, as long as you let it do its thing and don’t try to time ins and outs of markets. I’d argue that after the market’s bear market flop that it’s too late to think about getting out. Though markets could have more room to the downside, I view the risk/reward scenario as the most attractive it’s been since the second quarter of 2020.
Indeed, it would have been nice to have been a big buyer in the depths of the 2020 market crash. However, many forget just how hard it was to jump in while stocks were nosediving at such a rapid pace.
Restaurant Brands: A strong 3.7% yield and earnings momentum for a TFSA
At this juncture, I’m a fan of keeping things simple. Restaurant Brands International (TSX:QSR)(NYSE:QSR) seems like a terrific all-weather stock that may actually continue to rally once the 2023 recession rolls around. It’s a fast-food chain that’s seen its comps rise steadily in recent quarters. Sure, the harsh economic climate may be the cause for the nice sales jolt. However, I’d argue management’s investments in improving the customer experience is the main driver before same-store sales.
As the company finds the perfect balance between same-store sales growth and international expansion, earnings could grow at a sustained double-digit pace moving forward.
Sure, QSR has had more than its fair share of mishaps in the past, but it’s ready to move on with a growth-focused mindset. With a nearly 32% operating margin (above the 23.3% industry average) and a sky-high 34.3% return-on-equity ratio (above the 23.4% industry average), QSR seems like a fast-food beast that will be tough to stop in its tracks, even as the economy sinks in the back half of 2022 and 2023. At 23.2 times trailing price to earnings, you’re getting recession-resilient growth at a pretty reasonable price tag, in my opinion.
Recently, Burger King (one of QSR’s top chains) won over a new master franchisee named McWin, with over 200 locations to be opened in Poland. Such a deal is exciting for the old-time chain, as it looks to increase its footprint in Europe.
