Considering how volatile the economy is right now, it is impossible to predict when the next bull market will arrive. Between high inflation, rising interest rates, and persistent geopolitical tensions, it might be safer to assume that the TSX will remain in a bear market territory this year.
However, the ongoing bear market is getting old. While the current environment might continue this year, long-term investors know that the market will eventually embrace bullish conditions.
In any case, if you have a Tax-Free Savings Account (TFSA) portfolio, you should be capitalizing on the current market. When you buy and hold assets in a TFSA, any wealth growth through shareholder dividends and capital gains is sheltered from income taxes.
With the bulk of the TSX trading at discounted rates, it might be the perfect time to invest in high-quality companies that can deliver stellar returns when the market eventually becomes bullish.
To this end, I will discuss two TSX stocks you should keep on your radar, if not in your TFSA portfolio, to prepare for the next bull.
Canadian Tire
Canadian Tire (TSX:CTC.A) is a $10.67 billion market capitalization Canadian retail store chain. It has a diversified portfolio comprising automotive, hardware, sports, leisure, and houseware goods. It is no secret that retailers dealing in discretionary goods take a hit when the economy crumbles, but they stand to benefit the most in better macroeconomic environments.
Canadian Tire is a well-managed retailer, proving its resilience amid the pandemic. Like most other retailers, Canadian Tire stock crashed hard but posted a strong recovery in just a few months. The ongoing bear market has dragged on for almost a year.
The past few weeks have seen an uptick in Canadian Tire stock, but it trades at a discount from its all-time highs. As of this writing, Canadian Tire stock trades for $178.63 per share and boasts a juicy 3.86% dividend yield that you can lock into your TFSA portfolio today.
Restaurant Brands International
Restaurant Brands International (TSX:QSR) is another top name to consider investing in to prepare your TFSA for the next bull market. RBI is a $42.05 billion market capitalization American-Canadian-based multinational fast-food holding company.
While RBI might not be familiar to many, four restaurants under its belt might ring a bell. It owns and operates Burger King, Tim Hortons, Popeyes Louisiana Kitchen, and Firehouse Subs.
Despite strong brands under its banner, RBI stock has not been a favourable asset to own for the last few years. The company has made some changes to its upper management to climb over the current slump, and it might be on the cards soon.
Currently, it is focusing on bringing Burger King back to a better position. Once that happens, it can bolster the other three brands to derive more growth.
Insider Monkey has named RBI as one of the top 25 most valuable food companies worldwide. Operating over 30,000 restaurants in 100 countries, it is well positioned to deliver stellar returns in the next bull market. As of this writing, Restaurant Brands International stock trades for $89.50 per share.
Foolish takeaway
Some risk-averse investors might argue against investing in a bear market when you can save yourself from potential losses until the next bull market.
While you can wait till that happens, doing so can make you lose the opportunity to realize substantial returns. Investing in the stock market at its lows can prevent you from missing great bargains. The next bull market will not make an announcement beforehand, and it is impossible to time the market.
At current levels, Canadian Tire stock trades at a 15.08% discount from its May 2021 all-time high, and RBI stock trades for a 14.28% discount from its August 2019 all-time high. If you have space in your TFSA, it might be worth allocating some of it to shares of these two TSX stocks. By owning them when they are cheaper, you can realize outsized gains tax free in the next bull market.
