Buying TSX stocks near or even at their 52-week lows can be a smart move for long-term investors, especially as it allows you to capitalize on future market rebounds. Historically, the TSX Composite has averaged about a 7% annual return over the last decade. When quality stocks are trading at a discount, these offer investors a rare chance to lock in higher dividend yields and long-term capital gains when the market recovers. So, let’s look at some offering just that.
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Boyd Group
Boyd Group Services (TSX: BYD) is an example of a great investment currently trading near its 52-week low. Despite facing headwinds, Boyd is a market leader in the auto repair industry across North America, with a market cap of $4.73 billion. Revenue for the company has grown 3.4% year over year to $3.04 billion in the most recent quarter, thus highlighting its ability to maintain a strong operational base. Boyd continues to benefit from the essential nature of its services, and its widespread geographic presence provides insulation against localized economic disruptions.
In terms of earnings momentum, Boyd saw a dip in net income by 58.8% year over year. Yet this is attributed to inflationary pressures and labour shortages, which have affected many sectors. However, its earnings before interest, taxes, depreciation, and amortization (EBITDA) of $238.97 million and a steady cash flow of $325.91 million in the trailing 12 months underscore the company’s operational strength.
Boyd’s management remains focused on delivering operational improvements, which should position it for a rebound. As Boyd’s chief executive officer, Doug Britt, emphasized, “We are dedicated to expanding margins and driving future earnings growth.” This sets the company up as a promising long-term investment as market conditions stabilize.
Restaurant Brands
Restaurant Brands International (TSX: QSR), trading near its 52-week low, is another solid investment for long-term stability. Known for its well-established brands, including Tim Hortons, Burger King, and Popeyes, QSR offers investors a mix of growth and reliable income. As seen with QSR’s strong revenue of $7.48 billion for the last 12 months, it represents a 17.2% year-over-year growth. This highlights the stock’s ability to navigate economic uncertainties while expanding its global presence.
QSR’s strong earnings momentum continues to make it attractive. In the most recent quarter, the company posted a quarterly earnings growth of 16.2%, fuelled by its global expansion efforts and successful marketing campaigns. With a forward price-to-earnings ratio of 12.9, QSR is more than affordable. It also provides a solid dividend yield of 3.49%, making it a dependable income stream for investors. The company’s diverse brand portfolio and focus on expanding in international markets provide a buffer against any potential slowdown in North America, thereby adding to its long-term appeal.
While QSR’s shares may be near 52-week lows, its core strengths of a diverse brand portfolio, consistent revenue growth, and strong dividend make it a great option for investors looking for a safe, long-term investment. Management continues to focus on reinvesting in its brands and expanding internationally, thereby ensuring its ability to bounce back once market sentiment improves.
Bottom line
In a nutshell, buying TSX stocks at lows, like Boyd Group Services and Restaurant Brands International, can be a smart long-term move for Canadians. Both companies offer strong business fundamentals with promising growth potential despite trading near their 52-week lows. Boyd continues to hold a solid position in the auto repair industry, and QSR’s brand power and global reach make it a stable choice. These stocks provide a great mix of growth and steady dividends, thus making them excellent choices for long-term portfolios!
