The bear market in the S&P 500 has dragged on for quite a while. Though there was some hope that the popular market average would enter a bull market after a strong start to 2023, the latest round of bank woes has many curbing their bullishness. Still, a bull market is never too far away, even in the face of macro headwinds and unforeseen events (queue more regional banking troubles?).
That’s why I think new investors should continue to invest for the long haul. When times are uneasy, you’re likelier to get a better risk/reward (or bang for your investment dollar), at least over the long haul.
In this piece, we’ll check out two names that could do well if the bull takes the place of the bear this year.
TD Bank
TD Bank (TSX: TD) stock fell around 2% on Tuesday after First Republic Bank (NYSE:FRC) clocked in an ugly quarter that saw over US$100 billion in withdrawals. The bank run has the broader basket of U.S. and Canadian bank stocks under pressure once again, just a month after Silicon Valley Bank failed. Indeed, it’s hard to tell when the banking sector’s woes will end. With rates as high as they are, I’d not be surprised if a few more regionals add pressure to the banking scene and the rest of the market.
Still, First Republic’s issues seem unlikely to spread to the banking behemoths. For now, though, expect all the banks to fall in sympathy. If you’ve got a long-term horizon, though, I’d treat such further pullbacks as an opportunity to get more yield for a lower price.
TD’s remains well-capitalized (perhaps overcapitalized!), and it’s confident it’ll complete the First Horizons Bank deal, even in light of recent banking pressures. While shareholders are right to have their concerns, I think that TD will do what’s best for its long-term investors. As the wave of bank woes continues, I think the odds of TD getting a better deal will improve.
With an option to go bargain hunting in the U.S. regionals, I view TD as in a better position than the shorts think! With a 9.8 times trailing price-to-earnings (P/E) multiple and the option to make a better deal for a sought-after bank, TD is nothing short of compelling for value seekers. The 4.75% yield is always nice, too!
Alimentation Couche-Tard
Alimentation Couche-Tard (TSX: ATD) could keep its run alive in a new bull market. Even if the bear market lingers for another full year, Couche-Tard could continue adding to its recent gains. Shares of the convenience retailer are in a bull market of its own. And as the firm integrates its latest acquisition (TotalEnergies assets), earnings could be the force that propels shares upward, even as fear and panic grip markets once again.
For now, look for management to keep searching around for value as recession drives down valuations across the broader convenience retail space. With Parkland Fuel (TSX: PKI) under pressure again, I think Couche would be wise to consider a scoop-up if shares plunge below $30 per share again.
