2 Fantastic Growth Stocks to Buy Right Now

Restaurant Brands International (TSX:QSR) and another company are full of growth but have fallen on tough times.

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Canadian investors shouldn’t shy away from the market’s top growth stocks, provided that they can get in at a price that’s somewhat reasonable. Indeed, when it comes to the truly robust long-term growth plays, some of which may have strong secular tailwinds at their back, it may make sense to pay a multiple that’s fair.

Undoubtedly, bargain-basement valuations are ideal, but in a market like this, where consumer sentiment is showing subtle signs of resilience in the face of more interest rate cuts, I’d argue paying a fair or slightly discounted multiple is worth paying as opposed to being overweight in cash.

While many of the most intriguing growth stocks trade in the U.S. exchanges, Canadian investors still have a lot of names to love right here on the TSX Index. And in this piece, we’ll check out two such growth plays that look slightly undervalued as we move into the month of July.

Restaurant Brands International

Restaurant Brands International (TSX:QSR) is a Canadian fast-food icon behind Tim Hortons, Burger King, Popeye’s Louisiana Kitchen, and Firehouse Subs. Despite reporting decent results, the stock has been dragged down alongside many peers in the fast-food scene. Undoubtedly, inflation has weighed quite heavily on consumer behaviour. The good news is that inflation is coming back down, and eventually, all the folks who’ve been enjoying their own home cooking will eventually want to start eating out again.

After plunging almost 15% from all-time highs, I view QSR stock as a relative bargain right now while it’s going for 17.7 times trailing price to earnings (P/E). The 3.33% dividend yield is rich, and the damage has likely been overdone at this point, primarily due to factors outside the firm’s control.

As long as the firm can offer competitive prices and interesting new menu items, I suspect QSR stock will rebound from its latest setback, possibly sooner rather than later.

Kinaxis

Kinaxis (TSX:KXS) stock has been flatlining since the nearly 30% peak-to-trough plunge that happened last summer. The company, which makes supply-chain management software, may have a lack of momentum, but it still stands out as an intriguing long-term growth play for investors patient enough to wait for the narrative to unfold.

Some of the company’s newest innovations (like on the retail side) use artificial intelligence (AI) to help keep supply chains running efficiently and sustainably. Indeed, Kinaxis stands out as one of the more underrated AI beneficiaries in the Canadian market. For now, though, it remains unclear when such AI enhancements will begin to drive sales and earnings growth.

With a new focus on what AI has to offer, investors should be giving Kinaxis’s management the benefit of the doubt, especially while the stock’s still stuck in a multi-year rut. Though seemingly untimely, Kinaxis is innovative on the front of AI and punches way above its weight class.

The Foolish bottom line

Restaurant Brands and Kinaxis shares are great growth plays that are going for pretty cheap multiples right now. Between the two, I like QSR stock more for the juicy dividend and cash flow predictability.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Joey Frenette has positions in Restaurant Brands International. The Motley Fool recommends Kinaxis and Restaurant Brands International. The Motley Fool has a disclosure policy.

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