It’s been a hot start for the broader basket of TSX stocks this year. Though shares are coming in again, I think that long-term investors need not worry again. We’ve got a bit more clarity on the direction of rates and the thinking of the Bank of Canada. A majority of rate hikes are in the past now. And with a pause within reach, I think investors should actively look for bargains as recession talk takes the place of rate-hike rumours.
It’ll take a while longer for inflation to normalize. However, I think the U.S. regional bank crisis could help fan inflation and help drive it much lower than expected. Even if the Bank of Canada or U.S. Federal Reserve (the Fed) overdoes it with the hikes, they can easily reverse course with a cut or two, perhaps even more.
Focusing on the long term could pay off for Canadian investors
In any case, this inflationary era will, in due time, be forgotten. And as new investors focus on the next five, 10, and 20 years, I think it’s smart to stay invested, even as nearer-term risks are unearthed. Of course, you’ve always got to consider the downside risks with your portfolio. But there’s a difference between preparing for risk and reacting to panic after others already have.
In this piece, we’ll look at one of the best TSX value stocks that has momentum at its back. This convenience store company is thriving in today’s rocky climate. And I’d bet it’ll continue to do so, as its rally stands to be better supported by impressive earnings growth and margin improvements.
Simply put, I would be on the following past-year winner to keep on doing more of the same over the next 18-24 months and beyond.
Alimentation Couche-Tard
I can’t get enough of Alimentation Couche-Tard (TSX:ATD) stock and will be watching for any potential dips to add to my already sizeable stake. Couche-Tard has all the traits of a wonderful business to hang onto for the long haul. It’s not just about the upward trajectory of the stock over the past five to 10 years, either!
The company is a master at deal making. Its balance sheet has steadily improved year after year. In 2021, when it was “hot” to make deals to impress investors, Couche-Tard stayed mostly quiet. Nowadays, cash is harder to come by.
Various U.S. regional banks are experiencing runs. And startup tech firms could become more starved for liquidity, as interest rates continue surging higher. Meanwhile, Couche-Tard is sitting in a very impressive liquidity position. Cash is now king. And it’s the firm’s balance sheet that’s helping it move head and shoulders above the pack.
The company isn’t just a serial acquirer, though. It knows how to drive organic growth, too. We’ve seen this in many quarters where same-store sales have been very impressive. As the company looks to inorganic growth opportunities again, now that the market has wobbled a bit, I’d look for Couche-Tard’s momentum to keep taking it to new heights.
The stock’s going for $66 and change and trades for 17.28 times trailing price to earnings. That’s still too cheap, in my opinion, given the resilient growth, the strong balance sheet, and the brilliant stewards you’re getting exposure to.
