Consumer discretionary stocks may not come straight to mind during a period of economic uncertainty, especially as the Bank of Canada (BoC) recently held interest rates steady at 5%. While it was expected, Canadians still weren’t pleased to hear that we could potentially continue to see rates this high until June.
And yet, there are companies that actually do quite well even in the face of high interest rates. What’s more, they tend to do well really no matter what! And have been expanding to boot. So let’s look at the best consumer discretionary stocks I would pick up on the TSX today.
Dollarama Stock
First up we have Dollarama (TSX:DOL), a go-to option for many really no matter what the market is doing. But in this inflationary environment, Dollarama stock remains on top as the go-to for a reason. The company continues to hold down prices as low as possible, leading to an increase in spending at their businesses as consumers look for cheap items.
This has actually led to positive results again and again. The company recently pushed past its all-time high, now above $100 per share. Dollarama stock recently reported earnings that beat estimates, with earnings per share (EPS) reaching $0.92, above the $0.958 expected. Overall, the company continues to climb towards consensus price targets around $106, creating an upside around 4% as of writing.
In fact, analysts have been weighing in and upping their price targets after earnings. Analysts are quite positive about the future of Dollarama stock, with a resilient business model that offers value-priced goods even in an inflationary environment. With a history of delivering consistent revenue and earnings growth as well, it looks like a solid one to consider even amidst the rate hold.
Magna stock
In the automotive area, Magna International (TSX:MG) has been a bit more volatile. Magna stock, however, reported positive earnings for the last quarter, with an EPS of $0.94. This may have met analyst expectations, but was also seen as an improvement given that the company has gone through so many supply-chain distortions in the past.
What’s more, the company does have a history of consistent earnings growth. Now with supply-chain issues out of the way, consumers are looking to buy a car once more after years of high prices. In fact, analysts believe this a strong long-term growth play, especially as it expands into the electric vehicles space.
For now, there are certainly headwinds like rising input costs and a slowdown in global auto protection. Yet overall, the company has been expanding into so many areas and is even part of creating automotive software applications with other major brands. So it could be a huge winner at these levels, with shares trading at $12.74 as the stock continues to turnaround.
Restaurant Brands
Finally, the last of these stocks to consider would be Restaurant Brands International (TSX:QSR). While the stock has seen volatility in the past, it has seen far more growth after earnings. This comes after QSR stock beat out analyst expectations on its EPS, reporting $1.017 rather than the expected $0.988.
Analysts are slowly but surely upgrading the stock price as the company is seeing positivity. Its Tim Hortons and Popeyes locations are seeing an increase in use. This has led the company to rethink expansion into the United States as well.
Yet it still needs to expand its Burger King operations, and so that might be next up on the table. Even so, all these brands certainly benefit from global recognition and exposure. With a history of consistent revenue as well, and rebounding quickly after the pandemic, it would certainly be another to consider for when inflation and interest rates rebound.
