Beating the market doesn’t have to be a chore for new investors who want more of a set-and-forget type of portfolio. Indeed, truly wonderful businesses don’t require nearly as much constant monitoring as you’d think. With the disruptive impact of generative AI technologies, numerous industries stand to be impacted, positively and negatively.
However, when it comes to the wider-moat companies, some of which we’ll cover in this piece, generative AI’s impact may be less of a disruptor and more of a means to gain on the front of operating margins. Indeed, whenever you have a proven market-beater with many years (or maybe even decades) of impressive performance, you may just have a stock that deserves a semi-permanent spot at the very core of your growth-focused TFSA (Tax-Free Savings Account).
TFSA investors: Preference for proven market beaters!
Of course, you should also strive to get a great bang for your buck. But even at fair valuations, I do think the following businesses can build their value over time. So, if you’re a new investor who’s looking to start a position, it may make sense to buy in part at these levels and more on dips that will happen over time. Remember, there’s no need to exhibit the FOMO (fear of missing out) mentality.
There will always be potentially better prices of admission if you’re willing to wait things out. While it may take months (or even years) for a stock on your radar to be undervalued again, you should be ready to be a net buyer when the time strikes. For now, let’s look at three Canadian market beats that ought to be on your watchlist in case the second quarter (Q2 2024) sees a return of volatility.
Waste Connections
Waste Connections (TSX:WCN) is basically the anti-AI stock these days, with little, if any, meaningful coverage given to the market beater in recent months. This relative lack of spotlight is despite the fact that WCN stock soared almost 17% in the first quarter. That’s a big gain for a low-tech firm, and I don’t think the surge will be quick to be given back in Q2 2024.
Of course, the waste collector has a wide moat, but the shares already have a fat premium at more than 57 times trailing price-to-earnings (P/E). Though I’d love to buy on a pullback, I’m not so sure one will occur in the stock’s future.
With that, I’d not hesitate to buy a tiny stake in the $59.6 billion company here at around $230 and change per share. Sure, it’s not cheap, but it’s a proven TSX beater, rising more than 32% in the past two years and over 96% in the past five years.
Alimentation Couche-Tard
Alimentation Couche-Tard (TSX:ATD) doesn’t tend to go on sale often. But when it does, investors should be ready to make a move. The stock recently fell more than 12% off its all-time high hit back in February 2024.
As shares fall into the red year-to-date, I’d argue now is a fantastic time to be a net buyer of the convenience retail juggernaut. It’s still firing on all cylinders, and the recent correction is nothing to fear. In fact, it’s only healthy after ATD stock went slightly parabolic to start the year!
With strong long-term momentum (shares up 88% in the past five years), I’d look to get serious about buying the dip, with shares going for 18.3 times trailing P/E. That’s far too low for a stable earnings grower with a track record of blowing away the TSX Index!
