Market participants may be feeling just a tad uneasy about the rocky start to 2024, with the averages seemingly consolidating after the explosive upward move experienced in the final few months of 2023. Indeed, after the less-than-ideal start, many investors may be feeling a bit uneasy about where stocks are headed next. If stocks can rally strong, a stage could be set for some sort of market correction, right? What goes up in a hurry could come down just as fast.
Though the markets may be getting a tad richer compared to fall 2023, I’d argue that not everything is bound to give back the returns enjoyed in the final quarter of 2023. The beauty of being a self-guided investor is that you don’t have to settle for what the market gives you. By picking your spots wisely and insisting on getting good value from every move you make, I believe everyday investors can beat the TSX Index, perhaps by a wide margin.
In this piece, we’re going to have a look at two of my favourite stocks to help investors beat the TSX Index over the long haul. Now, the TSX Index doesn’t have to be difficult to beat, given it’s heavily weighted in the financials and energy plays, some of which aren’t even best-in-breed. By insisting on high-quality stocks at somewhat reasonable valuations, I think beating the TSX can be a feat that’s all too easy, whether you’re a new investor or a seasoned one.
Restaurant Brands International
Restaurant Brands International (TSX:QSR) isn’t just a fast-food firm; it’s a company standing behind four “growthy” restaurant brands (Tim Hortons, Burger King, Popeyes Louisiana Kitchen, and Firehouse Subs). Not only are these brands iconic, but they have virtually untapped growth potential at the international level. Heck, Popeyes still has room to run in the domestic market!
Recently, the company doubled down on its growth ambitions by scooping up a top American Burger King franchisee in a deal worth around US$1 billion. The move could help accelerate modernization initiatives and elevate the Burger King brand. I’m a fan of the move and think it’ll help make Burger King a powerhouse in the U.S. market, if it isn’t already.
Hats off to Burger King’s U.S. team, as they’ve really put in the changes to transform the brand for the modern age. With a 2.87% yield and new highs in sight, QSR stock is one of the names I’d bet on over the TSX Index this year!
Constellation Software
Constellation Software (TSX:CSU) stock has been on an unbelievable run in recent years, outpacing the TSX by a wide margin. Over the past five years, the underrated software play has soared more than 270%. Over the past 10 years, the returns have swelled to over 1,400%. Indeed, past returns are no guarantee of what’s to come in the future.
That said, I do believe the $75.34 billion diversified software giant could continue to outpace the TSX Index by a wide margin over the next five or 10 years. The company has a formula in place to bring out the best in its acquisition targets. And with the rise of artificial intelligence, I think Constellation is an underrated play as it looks to play the next-generation disruptive software firms.
In a way, Constellation is the closest thing to investing in venture capital on the TSX in a convenient and profitable fashion! With that, investors shouldn’t ignore the name!
