The 1 Stock on Top of My TFSA Shopping List

Alimentation Couche-Tard (TSX:ATD) is getting cheaper by the day amid SVB’s recent downfall.

| More on:
four people hold happy emoji masks

Source: Getty Images

Tax-Free Savings Account (TFSA) investors have a lot of reasons to take a raincheck on the potential bargains put forth by Mr. Market in recent quarters. There’s a lot of concern, and many market strategists don’t expect much in the way of gains to be had from here. Sure, big names are saying there could be downside in the cards, as the U.S. Federal Reserve keeps the rate hikes coming. That said, there are also other voices on the Street that think gains can be had, even amid increasingly challenging times.

It’s not just higher rates that firms will have to grapple with. The impact of rates is starting to be felt. The recent downfall of SVB (Silicon Valley Bank) was one of the dominoes to fall as a result of unprecedented rate increases. Now, some may think the Fed will reconsider its double (50-basis-point, or bps) hike at the Fed meeting later this month. Indeed, some predict a 25-bps hike, while others think no hike will happen due to the shocker of SVB and its impact.

Either way, I think investors shouldn’t panic sell at this juncture, even if a 50-bps hike is still in the books. If anything, a lack of hikes in the next meeting could signal things are uglier than they are, at least with regards to some of the banks. The last thing the Fed wants is to replace high inflation with a financial crisis, which may not even guarantee an effective alleviation of inflation.

In any case, TFSA investors should stick with what they know best: the companies on their radars.

Sure, rates and bank flops will have an impact on a company under question. But it’s your job to evaluate the extent of such risks and whether or not recent price action is justified. When it comes to most stocks, I’d argue recent negativity is overblown a bit.

Couche-Tard: What does SVB’s fall have to do with convenience stores?

Think of firms like Alimentation Couche-Tard (TSX:ATD), a steady convenience store giant and defensive earnings grower that took a hit last Friday. The stock is now off 5% from its weekly high in sympathy with the banks and other TSX stocks that were quick to retreat on news of SVB’s demise.

I think there are no reasons why Couche should have sold off so viciously. The company still has a magnificent balance sheet and some of the most durable operating cash flow streams in the Canadian consumer staple space. Further, Couche has managers that know how to make the most of turbulent times. If anything, recessions and downturns are where Couche can create the most value, as it leverages its strong financial flexibility.

Couche-Tard is always hungry for a deal. These days, deals seem to be getting better by the day. In due time, Couche-Tard will get active again. Until then, look for Couche-Tard to slowly and steadily continue making small steps to improve its position on the other side of the looming recession.

Bottom line

Bank failures are scary. SVB’s fall may be giving many bad memories of the events that unfolded around 15 years ago. A softer landing may seem further out of reach after last week’s events. Regardless, Couche-Tard remains a wonderful business that stands to be little affected by investors banking on pain in the banking industry.

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 Alimentation Couche-Tard. The Motley Fool has positions in and recommends Alimentation Couche-Tard. The Motley Fool has a disclosure policy.

More on Investing

Profit dial turned up to maximum
Dividend Stocks

2 TSX Dividend Stocks With Seriously Huge Payouts

The TSX telecom sector has some great high-yielding companies up for grabs.

Read more »

TFSA and coins
Dividend Stocks

Dividend Stocks With Yields TFSA Investors Should Lock In Now!

Are you looking to build a passive-income stream? Here are two top dividend stocks to load up on in your…

Read more »

Gas pipelines
Energy Stocks

Better Energy Stock to Buy: Suncor or Canadian Natural Resources?

Suncor and Canadian Natural Resources are off their recent highs. Are these stocks now good to buy?

Read more »

tsx today
Stocks for Beginners

TSX Today: What to Watch for in Stocks on Thursday, March 23

TSX stocks may remain volatile, as investors continue to assess how the high interest rate environment could affect the economy…

Read more »

A plant grows from coins.
Dividend Stocks

2 Young TSX Stocks You’ll Be Glad You Bought in 10 Years

Youth means nothing when you plan to hold strong companies long term. These two TSX stocks should therefore be first…

Read more »

Man with no money. Businessman holding empty wallet
Dividend Stocks

Is it a Trap? 3 TSX Stocks With Ultra-High Dividend Yields 

Who doesn’t love dividends? But the high-interest rate environment makes ultra-high dividends unsustainable. Are these stocks a value trap?

Read more »

Value for money
Dividend Stocks

3 Value Stocks for Superior Returns in 2023

Given their solid underlying businesses, stable cash flows, high dividend yields, and attractive valuations, these three undervalued TSX stocks could…

Read more »

grow money, wealth build
Investing

2 Top Stocks That Could Turn $10,000 Into $50,000 by 2030

Growth stocks like Constellation Software (TSX:CSU) could turn $10,000 into $50,000 or more by 2030.

Read more »