The stage could be set for a prosperous summer if the momentum from the first half’s market rally carries over. Indeed, the month of June was quite rewarding for many investors. Though it’s never a good idea to time the market, I do think that things may still be looking up for the broader TSX Index, as it looks to catch up to the likes of the U.S. market averages. Undoubtedly, the TSX gains on the year aren’t all too impressive. Year to date, the broad TSX Index is up an unimpressive 1.9%.
Indeed, the heavy exposure to the financial and materials sectors is doing the index no favours. When you have a look at some of the wonderful stocks in the TSX basket, though, the performance is that much better. As such, I do think investors should keep buying the value names on their radar that continue to perform but aren’t necessarily overvalued quite yet.
Alimentation Couche-Tard
Think companies like Alimentation Couche-Tard (TSX:ATD), which reported stellar earnings results on Wednesday, causing shares to soar just north of 4% on the day. The company is a winner, and it just finds ways to keep winning despite macro headwinds and a rather sluggish TSX.
The stock is currently sitting at $68 per share. That puts it up an applaud-worthy 13.1% year to date. I think the promising results and potential for more M&A deals could help ATD rally to much higher highs.
The stock still isn’t expensive after Wednesday’s single-day pop. With fourth-quarter profits coming in at US$670.7 million (note that Couche reports in U.S. dollars), thanks to fuel and merchandise sales, I do view Couche-Tard as a magnificent stock at the intersection between growth and value. Of course, the recent spree of acquisitions has been noteworthy. But with still plenty of liquidity, the company has room to make even more deals, potentially at bargain prices.
As Couche-Tard moves on from its strong quarter, I think Canadian investors can’t afford to ignore the convenience retailer any longer. Not if they want to beat the TSX Index by a wide margin over the long term.
Cineplex
Shares of Cineplex (TSX:CGX) have been sagging lately. The stock is back in the single digits at $8 and change per share. Undoubtedly, the movie business has been really tough, even post-lockdown. With a recession approaching, demand for movie tickets could take another hit.
Regardless, I’m a believer in Cineplex’s managers and think they can pull off a recovery as the summer movie slate looks incredibly robust, with films with Mission Impossible: Dead Reckoning Part One, Barbie, and Oppenheimer coming up. It’s hard to remember the last time the movie slate was this good. My guess is that such films will help Cineplex get bums in seats.
The stock continues to be profoundly volatile. But those with courage may wish to nibble before the summer movie season officially kicks off!
Bottom line for investors seeking summertime gains
Couche-Tard and Cineplex are intriguing options that could help new value investors position themselves for decent results in the second half and through 2024. Between the two, I’d have to go with Couche-Tard. It continues to fire on all cylinders, and with such a rock-solid management, it’s likely a mistake to take profits after Wednesday’s surge!
