Investing in growth stocks and other high-beta companies in this current cycle has paid off well for long-term investors. Since the Great Recession, buying any growth-oriented company has produced market-beating returns, even for certain companies that have not shown the ability to be consistently profitable. Many defensive stocks have lagged, leading to questions of whether certain companies are worth buying at all.
Of course, no one knows what the future will hold. An inverted yield curve for more than a year suggests some sort of steep decline is likely in order, but it’s impossible to try to time any such decline.
That said, I think now is a good time to be taking a defensive position in the market. For those willing to do so, here are three stocks I think are worth considering for solid long-term upside.
Restaurant Brands
Restaurant Brands (TSX:QSR) is a global conglomerate of quick-service restaurants, operating under world-class banners such as Tim Hortons, Burger King, Popeyes Louisiana Kitchen, and Firehouse Subs. The company generates around $35 billion in systemwide sales from more than 28,000 restaurants in 100 countries. For those looking for diversified exposure to lower-end dining, this is the way to play the space, in my view.
The company’s overall structure is defensive, but there are other reasons why I like this stock besides the likely trade-down consumers will see if the stuff hits the fan. This is a stock that provides a reliable dividend yield of 2.9% and expects to continue expanding its business globally, opening new locations every week all over the world. With expectations of reaching more than $60 billion in systemwide sales in the years to come, this is a defensive growth stock I think investors can rely on right now.
Alimentation Couche-Tard
Moving from fast food to gas stations and convenience stores, Alimentation Couche-Tard (TSX:ATD) remains one of my top picks for defensive investors. The stock has been on a tear, surging more than 16% over the past year. But I think the stock’s recent dip could provide a nice buying opportunity for those looking to pick up the stock at an even more reasonable 18 times earnings.
The company operates a convenience store network operating in North America, Poland, Ireland, Russia, Scandinavia and the Baltics. It predominantly generates sales through tobacco products, fresh food, groceries, and other items. Couche-Tard plans to expand its global operations by focusing on generating organic growth by consolidating its brands to increase customer loyalty. This strategy will help Couche-Tard grow exponentially in the upcoming years and offer stable returns to long-term investors.
Suncor Energy
In the energy sector, Suncor Energy (TSX:SU) remains among my top picks for defensive growth. The company is an integrated energy giant focused on the North American market. Suncor’s operations include oil sands development, production and upgrading, offshore gas and oil and petroleum refining in Canada and the United States. In addition, the company owns PetroCanada retail and whole distribution networks.
Over the last 30 years, the company’s stock price appreciated more than 2,100% to its current share price just shy of $50 per share. The company’s strong dividend yield of 4.4% provides investors with a stable total-return profile, and one I think is worth investing in, given the company’s attractive valuation of eight times earnings.
