It’s off to the races again for the broader stock markets, with the TSX Index surging 1.6% on what was a hot Tuesday of trade. Indeed, the stage seems to be set for a glorious Santa rally, with inflation numbers in the U.S. coming in a tad tamer than expected. Looking ahead, investors may wish to pick away at what remains of the bargains as pessimism finally diminishes.
Without further ado, let’s have a closer look at two Canadian stocks that may still have plenty of room to run as we head into the upbeat holiday season.
Alimentation Couche-Tard
First up, we have global convenience store firm Alimentation Couche-Tard (TSX:ATD), which actually finished Tuesday down by 0.3%. Indeed, Couche-Tard has been exhibiting less correlation to the broader TSX Index of late. With shares close to new all-time highs, I view the stock as a great way to outperform in most environments.
Although Canadian stocks had a big day on Tuesday, a recession may still be in the cards. And if it is, you’ll want to be sure you’ve got the holdings that can hold their own when the economy slips into a funk. As a consumer staple with the ability to grow through thick and thin, Couche-Tard stock seems like the perfect core holding for any sort of all-weather portfolio.
At writing, shares are on the expensive side at 18.61 times trailing price to earnings (P/E). Sure, a portion of the recent rally is due to multiple expansion. That said, the company has continued to post impressive earnings results. And as long as Couche-Tard continues executing on its growth plan, I’d not be afraid to pay a multiple that’s close to 20 times trailing P/E. Arguably, shares are still cheap, given the defensive growth traits you’re getting from the name. And let’s not forget about the strong balance sheet and the world of merger and acquisition opportunities that could help jolt shares.
Restaurant Brands International
Up next, we have Restaurant Brands International (TSX:QSR), a one-stop-shop fast-food firm for Canadian investors looking to expose their portfolios to a wide range of compelling food chains.
The firm behind Burger King, Popeyes Louisiana Kitchen, Tim Hortons, and Firehouse Subs has been trading in a turbulent fashion in recent years. The latest quarter saw Burger King come up short on the same-store sales front. Despite the underwhelming numbers at the big chain, I wouldn’t hit the panic button quite yet.
At the end of the day, a potential recession bodes well for the value-rich burger chain. As such, I’d not be afraid to scoop up shares while they’re still below $100 per share. The 3.22% dividend yield remains ripe for picking if you’re looking for a defensive growth pick that can fare well in most seasons!
The Foolish bottom line
Has the Santa rally finally come to town? Possibly. Either way, investors shouldn’t expect recent market momentum to continue through December. Stocks were heavily oversold going into November. And now, they seem to be in the right spot. As such, investors should insist on value plays and not chase the FOMO types of plays just because the heat has returned to Wall and Bay Street.
ATD and QSR shares still stand out as modestly priced, regardless of what Mr. Market ends up doing next!
