Is QSR Stock a Buy in 2024?

Let’s dive into whether Restaurant Brands (TSX:QSR) stock is worth buying right now or waiting on, given its recent dip.

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The Canadian stock market has multiple fundamentally strong stocks that deliver optimal returns and generate significant investor wealth. As a Canadian investor, you can seek the options to invest in stocks that will protect your wealth and help you earn higher returns. One such stock is Restaurant Brands (TSX:QSR), a defensive stock that has the potential to outperform the market trends. 

I’ve pounded the table on QSR stock for a long time. There’s certainly a good reason for this, and the company has provided plenty of growth and dividend income over the years to justify its status as a core portfolio position.

However, I think the future may be brighter for this stock than many think. Here’s why I think QSR stock should be a staple investors consider adding to on this recent dip.

QSR stock continues to hold steady

Truth be told, Restaurant Brands is a company that’s not really going to explode higher, and it’s not a company with the sexiest business model out there. A purveyor of fast-food banners, including Tim Hortons, Burger King, Popeyes Louisiana Kitchen, and Firehouse Subs, this company represents a portfolio of some of the best fast-food restaurants in the world.

That said, in a market downturn, this is exactly the kind of stock long-term investors will want to own. The company generates consistent and growing cash flow as it expands its footprint globally. And in times of economic turmoil, trade down from the average consumer toward more cost-friendly meals will most likely offset any reduction in pricing power and volume declines.

Strong balance sheet and robust financials

From a fundamentals perspective, there’s a lot to like about how Restaurant Brands is positioned right now. The company’s balance sheet remains strong, with more than $1 billion in available cash. The company does have a high debt load but is able to service it well and still pay a very handsome dividend yield of more than 3.3% at current levels.

The company’s strong cash flow growth has continued this past year, with the company adding nearly 4% more locations and seeing organic growth at most locations. Popeyes has led the way, with a same-store sales increase across all locations of nearly 5%. Given the company’s organic and footprint growth, investors can reasonably expect high single-digit to low double-digit growth on an annual basis, allowing room for future dividend hikes and debt reduction.

Bottom line

As Restaurant Brands’s balance sheet continues to improve and its dividends increase, investors stand to reap the benefits of capital appreciation along the way. This is a total return story I like, particularly at a reasonable price-to-earnings multiple of around 17 times (the cheapest this stock has been in some time).

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 Chris MacDonald has positions in Restaurant Brands International. The Motley Fool recommends Restaurant Brands International. The Motley Fool has a disclosure policy.

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