Don’t let the hot stock market rally leave you cheering from the sidelines. It’s probably going to be a rougher road from here, but don’t let that deter you from buying the undervalued stocks that do come across your radar. If there’s a pitch thrown in your strike zone, you swing. And it doesn’t matter how overheated the rest of the market may seem.
Indeed, it’s hard not to feel the bullishness of the crowd. Though it’s tempting to chase what others are chasing, it may be wiser to stick with what you know instead of giving into FOMO (the fear of missing out). Every few years, when stocks heat up, that sense of FOMO will pick up again, leading beginner investors towards some of the frothier stocks in the market.
At this juncture, it’s all about generative artificial intelligence (AI) and its long-term potential. Though generative AI has profit-producing applications, you can still risk overpaying for today’s “best” AI plays. With that, here are two intriguing plays I’d be willing to pick up with $10,000 through the next year. And no, there aren’t any AI stocks or AI chip plays on this list!
Alimentation Couche-Tard: A top holding of mine I’d love to buy more of in the new year!
Alimentation Couche-Tard (TSX:ATD) is a convenience retailer that’s one of the largest positions in my personal portfolio. Over the years, Couche-Tard stock has been on a fantastic run. And it’s a run that I think could carry into 2024 and 2025, led higher by smart acquisitions and prudent investments to jolt same-store sales growth.
Recently, shares spilled around 7% after hitting new highs in the $80 range. Today, the stock goes for $74 and change per share and trades at 17.9 times trailing price to earnings (P/E). It’s a fair multiple (at least in my humble opinion), making the dip worth pursuing, especially now that we’ve got more clarity with regard to the company’s next five years (yes, it entails more growth).
Undoubtedly, “belt-tightening” consumers could weigh on coming quarters. Management is fully aware of the macro headwinds that could derail its hot run. That said, I believe that a weak consumer would have made a dent already. And given inflation is downtrending, I’d argue that an alleviation of belt-tightening could help spark an upside surprise for a midpoint of 2024.
Either way, Couche-Tard stands out as a more defensive retailer. Convenience can cost a great deal. However, the company has done a great job of passing on value to its consumers in the form of fresh food offerings and lower-cost private-label brands. I continue to believe that the private label is Couche-Tard’s weapon against high inflation. As inflation looks to fall toward normalized levels, I think Couche-Tard stock’s rally could kick it up a notch, perhaps powering it as high as $100 by next year’s end.
The Foolish bottom line on ATD stock
Though I’d be a buyer for ATD stock for $10,000 at these levels after its latest mini-correction, new investors may wish to implement a dollar-cost averaging (DCA) approach, which entails buying incrementally over time.
