TFSA investors shouldn’t wait for some pullback before getting started investing. Undoubtedly, if you didn’t nibble away at the September–October dip, you may be tempted to wait for the market’s potential revisitation of such lows. With a slight dovish tilt from the U.S. Federal Reserve (or the Fed, for short), markets have been on a scorching run, with the September–October dip being fully recovered from after a red-hot November that still seems to be running quite robust into the month of December. Indeed, the Santa rally seems to be at full speed as we head into 2024.
With the S&P 500 up nearly 15% and the TSX Index up almost 10% from those October 2023 lows, it seems like investors seeking to put in new money here may be at risk of chasing and receiving the full blow of the next inevitable market correction.
Now that new investors feel better about inflation and the economy’s prospects (thanks to hopes of lower rates), expectations do seem a tad higher. If inflation goes down no further in the new year, markets may very well be at risk of backtracking. And though it’s hard to time such dips, I do think it’s always wise to have a backup plan in the form of cash sitting on the sidelines.
TFSA investors: Wait for a pullback? Or gradually buy value stocks?
For now, though, I think it’s wise not to overload on cash while there’s still value on the TSX. Though valuations in the U.S. markets are getting somewhat frothy, I think it’s hard to make the same case for Canada’s stock market which, I believe, still has numerous value options to pick from as the market rally looks to make its next move!
In this piece, I’ll share one intriguing TSX stock that I’d be inclined to watch closely in the new year and beyond. Perhaps buying a starter position (let’s say a 25% or 50% position) right now makes sense, with the intent of putting more money to work should a plunge hit at some point over the next 18 months.
Restaurant Brands International
Restaurant Brands International (TSX:QSR) had a decent year, rising by just shy of 15% year to date. With the stock a few bucks away from making new all-time highs (it’s certainly been a while), I do think QSR stock makes sense to buy on a breakout, especially since there’s still some chance of a recession, even though many TFSA investors may be inclined to believe no recession will hit in 2024.
Fast-food stocks tend to be great holds through economic hailstorms. Even if all is well in the new year, QSR stock has the means to continue its ascent as it looks to invest in its core brands (Burger King, Tim Hortons, Popeye’s Louisiana Kitchen) to compete more effectively with rivals in the quick-serve restaurant scene. Burger King has come a long way over the past two years. And I think transformative efforts will continue to propel earnings through the next three years and beyond.
Personally, I like the changes management has made and will look for the dividend grower to keep chugging along. With a juicy 3.1% dividend yield to sink your teeth into, QSR stock stands out as a bountiful option for TFSA investors at $100 and change per share!