After a decent start to December for the S&P 500 (the TSX Index is pretty much flat), investors may be hearing the bells of an incoming Santa Rally already. Indeed, 2023 has been a great year for broader markets, but certain strategists think the markets could be in for tough sledding for the year ahead.
Indeed, it’s hard to even imagine stocks adding to what was an already impressive year. Either way, new investors should stay the course and insist on swinging at stocks of great businesses that can continue to impress.
In this piece, we’ll check out two top stocks I’d look to consider with an extra $1,000 for the new year.
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McDonald’s
Up first, we have McDonald’s (NYSE: MCD), a super-sized, fast-food icon that’s been off to the races since bottoming out in mid-March. Since the lows, shares have surged nearly 19%. That’s a massive pop, but one that could have legs as we head into year’s end.
The recent launch of CosMc’s — a drive-thru and drink-focused “version” of McDonald’s — could be the start of something special. Though many big-name analysts don’t believe CosMc’s will disrupt the great American coffee giants, I think the new chain represents a compelling low-risk means to jolt the firm’s growth rate.
Additionally, the company’s back with its latest Adult Happy Meal, which includes toys designed by Harmlen-based artist Kerwin Frost. The move is intriguing and could draw huge lines at the local McDonald’s.
All considered, MCD stock looks like an absolute bargain, even after its sharp run in recent months. The stock trades at just 25.7 times trailing price to earnings to go with a 2.31% dividend yield. The American chain is worth venturing south of the border for if you’re looking for defensive growth in what could be a flat-ish year for the economy.
Of course, there are fine fast-food stocks here in Canada. However, I view McDonald’s as the top one to own as it looks to improve across various aspects of its business. Why not own MCD stock and the Canadian ones? Sure, there will be overlap, but I view the quick-serve restaurant space as attractive going into a year that may prove rocky.
CIBC
Up next, we have an underrated Canadian bank in CIBC (TSX: CM), which has also been heating up since hitting its bottoms back in October. The stock’s now up over 21% since those depths, and I wouldn’t expect positive momentum to subside anytime soon, not while expectations for the bank are so depressed in the face of a potential recession year.
The main attraction, I believe, has to be the dividend yield, which sits at 6.18% at the time of writing. At 11.36 times trailing price to earnings, the stock stands out as undervalued and potentially overdue for a multi-month rally. I think the year-end run may very well be just the start.
Of course, the bank stocks may have limited catalysts in 2024, as loan losses and all the sort continue to eat away at earnings results. Either way, CIBC and the broader basket stand out as great long-term options for income seekers also looking to get a good amount of capital gains from a relief rally.
