Shares of Canadian fast-food top dog Restaurant Brands International (TSX: QSR) could be the defensive dividend stock that actually fares better than the red-hot AI stocks going into the autumn and winter seasons. Undoubtedly, the stock market is grappling with various concerns right now. And dovishness from central banks, along with a few rate cuts here and there, may not be enough to soothe investor anxiety. Not when negative momentum in some stocks is picking up traction. Nobody wants to catch a falling knife, especially when the risks of a potential recession rise by quite a bit.
Of course, nobody wants a recession to hit. It’d have the potential to be catastrophic for the broader stock market, especially the cyclical and discretionary names that depend so much on a healthy consumer. Before you even think about trimming or selling out of certain at-risk stocks in your portfolio, however, it may be wise to step back and consider the big picture.
Though the odds of recession may still be low after last week’s upsetting finish, there’s always a chance that investors are caught by surprise. Negative surprises happen. And they should be prepared for, whether or not the likelihood of such is low. Though market sentiment has taken a hit, I still view stocks as better deals today than they were at the end of August.
Ready up for tough times, investors! It’s worth it!
Of course, riding a potential downturn is never fun, but the alternative is getting on the sidelines and potentially missing an explosive upside rebound. Remember how quickly the August rebound came?
Indeed, many jittery investors may have been forced to chase stocks on the way up, only to take a huge hit on the chin during last week’s rough reversal. I have no idea if stocks will continue sagging from here or if a recession will hit despite the rate cuts. That said, I think new investors should be ready to invest through difficult times rather than seek to time an exit.
Not even the best investors can time the economy or the markets over the near term. Heck, by selling in September, you may miss the boat should some unforeseen factor cause another reversal. If you’ve got dry powder, it makes sense to invest through the rough patch with names like Restaurant Brands International. It’s a fast-food firm that has the ability to grow through a market-wide correction or return of the bear market.
Restaurant Brands stock: Built for riding out rough market patches!
Arguably, QSR stock was built for times like these, when defensiveness and value trump heated trends and growth. Unsurprisingly, QSR shares were spared on Friday, ending the day flat (0%), as the rest of the market nosedived. At $91 and change, QSR stock trades at 16.9 times trailing price-to-earnings (P/E) with a side of a 3.5% dividend yield. Further, with recent rumours swirling around a potential Papa John’s Pizza (NASDAQ: PZZA) takeover, I couldn’t be more bullish on QSR stock.
Why? Papa John’s is in a historic funk right now, and the price of admission is way too low, given the power of the brand. In a prior piece dated many years ago, I suggested Restaurant Brands buy Papa John’s. The price of admission has only gotten better for QSR. If Restaurant Brands can land a deal, I see QSR stock as walking away with an absolute steal of a deal.
Restaurant Brands needs a high-quality pizza chain. And with Papa John’s, it has just that. As QSR offers more value to consumers, I see shares recovering from the 17% dip, even without much help from the market.
