Two factors that determine the stock prices in the long run are the interest rates and earnings. Investors cannot control the interest rates but can emphasize the company’s earnings results each quarter. Canadian investors can invest in two mega-cap stocks that will empower them to earn higher returns with low-risk factors.
Go through this blog to learn more about these two stocks.
Royal Bank of Canada
Royal Bank of Canada (TSX:RY) is the largest Canadian bank and one of the largest in the world. As many know, Royal Bank offers commercial and personal banking, insurance, wealth management services, and corporate and capital market services. The bank predominantly operates in Canada, with additional operations in the United States and a number of other countries as well.
Over the past year, Royal Bank has been among the steadiest performers of mega-cap banks. That’s largely due to the company’s diversified business model, which is less exposed to idiosyncratic risks relating to the Canadian real estate market.
Relative to its peers, Royal Bank remains my top pick for defensive investors looking to play the broader Canadian economy. That’s because this lender has its tentacles in most key sectors, financing a great deal of future growth on both a corporate and individual level.
In terms of valuation, investors certainly need to pay up for the certainty Royal Bank provides. The lender’s price-to-earnings ratio comes in around 12.5 times, but is supported by some rather strong growth. Impressive revenue growth for the company’s fiscal third quarter pegs the company’s forward multiples at much lower levels.
For those looking for a broad and largely defensive way to gain income and some decent capital appreciation upside over the long term, Royal Bank is worth a look right now. Indeed, on any dips, this stock becomes a no-brainer, in my view.
Restaurant Brands
Restaurant Brands (TSX:QSR) is among the stocks I’ve been pounding the table on for years, perhaps more than others. It’s remained my largest position for the better part of the past five years for good reason, given the company’s brand value and its defensive positioning right now.
With annual sales of more than $35 billion, Restaurant Brands has quietly become one of the largest quick-service restaurant conglomerates in the world. Known in Canada as the owner of Tim Hortons, the company also boasts a diversified fast-food portfolio, including Burger King, Popeyes Louisiana Kitchen, and Firehouse Subs.
In the company’s most recent report, net sales across al locations surged 6.4% on a year-over-year basis to $1.84 billion, with overall sales jumping double digits (10.9%). This increase was driven by organic growth as well as continued footprint expansion, factors I think will continue to play into this stock’s thesis moving forward.
Notably, the company has 0.94 beta (five-year monthly), indicating its less-volatile nature during market fluctuations. This feature of QSR stock is important, particularly for investors looking for less-volatile stocks to buy as uncertainty picks up. While the market may appear steady on the surface, I suspect we’ll see some waves form before the end of the year. For those looking to sail through this uncertainty, Restaurant Brands is a great stock to buy for safe harbour.
