These Winning Stocks Keep on Winning (and They’re Still Buys Today)

Alimentation Couche-Tard (TSX:ATD) and another stock are not showing any signs of slowing down!

| More on:
Hands holding trophy cup on sky background

Image source: Getty Images

There’s a big difference between chasing a hot, high-momentum stock due to hype and pursuing a top performer that may still have “rally fuel” left in the tank. Stocks at or around their all-time highs may be an indicator of full valuations, or perhaps overvaluation, but not all of the time! There also exist top performers that may still be cheap.

If a company’s earnings keep growing at a stellar pace, the price will need to rise accordingly to maintain a given price-to-earnings (P/E) multiple. Undoubtedly, earnings growth is harder to come by in times of recession. That said, there are a few companies that seem able to push higher, assuming the coming recession proves mild in nature.

Many pundits would agree that the next recession won’t be a doozy like the one endured in 2008. In this piece, we’ll look at two companies that have been major winners over the past year and could continue to score sizeable gains for shareholders who continue to stick by them, even as the economic climate becomes a bit more chilly.

Consider shares of Prem Watsa-run insurer and investment holding firm Fairfax Financial Holdings (TSX:FFH) and convenience store icon Alimentation Couche-Tard (TSX:ATD). Shares of both companies have enriched investors but are showing few signs that a hangover is on the horizon. I view both stocks are still reasonably priced, with catalysts that could help lengthen past-year gains to even higher highs. With that in mind, I see no reason to take profits on either name that continues to impress.

Fairfax Financial Holdings

Fairfax Financial is just shy of $1,000 per share after its colossal past-year surge of around 44%. The stock is up around 182% from its 2021 lows and could be headed higher, as the well-run firm improves its insurance underwriting performance, as its investments look to pay off.

Of course, the easy money has already been made. But that does not mean that aren’t any more gains ahead, especially at these multiples. As the broader market continues its recovery, I view the investing side as a very powerful set of legs that could extend Fairfax’s epic rally. On the insurance side, things are also looking up.

Simply put, Prem Watsa has shown he’s still a skilled top boss. At around 10.5 times trailing price to earnings (P/E), I view Fairfax as a value stock that just so happens to have momentum at its back.

Alimentation Couche-Tard

Couche-Tard is another hot stock that some may be reluctant to chase. The stock recently slipped just north of 4% from its new all-time high of around $68 per share. I think the dip is buyable, as the company continues bringing things into high gear. With a strong balance sheet that it could put to work on acquisitions in the retail space (grocer or more convenience stores), Couche-Tard’s current rally has pretty strong legs.

Further, as high inflation sticks around, I’d look for Couche-Tard’s private label to continue being a strong point for the firm. Consumers still desire convenience, but they also want a great deal. With a strong private label, Couche can give customers what they want. As the company looks to new technologies and product categories, I continue to view Couche-Tard stock as a staple for any long-term retirement fund.

At around 17 times trailing P/E, Couche is hardly an expensive stock, despite the impressive-looking chart!

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 and Fairfax Financial. The Motley Fool has a disclosure policy.

More on Investing

Businessman holding AI cloud
Tech Stocks

2 Artificial Intelligence-Powered Growth Stocks to Buy Right Now

Canadian investors should strongly consider Alphabet (NASDAQ:GOOGL) and another AI stock ahead of the next AI-driven tech boom.

Read more »

Canadian Dollars
Dividend Stocks

Where I’d Invest a $10,000 Windfall Right Now

This investing strategy increases returns while reducing risk.

Read more »

grow dividends

Got $3,000? These Stocks Could Double Your Money by 2030

Investors can look to snatch up stocks like goeasy Ltd. (TSX:GSY) and others for $1,000 each today for the chance…

Read more »

tsx today
Metals and Mining Stocks

TSX Today: What to Watch for in Stocks on Friday, September 29

The main TSX index remains on track to post its worst performance in four months, as it has already lost…

Read more »

Upwards momentum

This Growth Stock Has Market-Beating Potential

Are you looking for stocks with market-beating potential? Here’s my top pick!

Read more »

A colourful firework display
Tech Stocks

Nuvei Stock is on Fire This Year: Is it a Good Buy Today?

Nuvei stock (TSX:NVEI) is down about 85% since pandemic highs, falling 39% after earnings. So, what now?

Read more »

money cash dividends
Dividend Stocks

2 Dividend Stocks for Passive Income

Both of these dividend stocks are good sources of long-term passive income. They also currently trade at good valuations.

Read more »

Business success with growing, rising charts and businessman in background

3 Growth Stocks to Invest $6,500 in Right Now

Have you invested $6,500 into the stock market this year? You could be missing out. Find out why!

Read more »