Here Are My Top 2 TSX Stocks to Buy Right Now

TSX growth stocks such as goeasy and QSR continue to trade at a compelling valuation in 2024, making them top investments right now.

| More on:

The ongoing bull market has driven the valuations of several companies across sectors higher in the last 18 months. However, investors should note that while valuations might seem expensive, it makes little sense to await a pullback, as it’s almost impossible to time the market. Instead, long-term Canadian investors should consider adding quality stocks to their portfolio at regular intervals, as a disciplined approach is key to wealth building.

Keeping this in mind, here are my top two TSX stocks you can buy right now.

goeasy stock

Valued at $3 billion by market cap, goeasy (TSX:GSY) has returned close to 700% to shareholders in the past decade. If we adjust for dividend reinvestments, cumulative returns are closer to 900%. Despite these stellar returns, goeasy stock trades at a cheap forward price-to-earnings multiple of 11 times. Comparatively, it is forecast to expand earnings at a compound annual growth rate of 12% in the next five years.

goeasy provides non-prime leasing and lending services to customers in Canada. It offers unsecured and real estate-secured installment loans, such as personal, home equity, and auto loans. Moreover, its easyhome segment leases household furniture, appliances, electronics, and computers.

While goeasy is part of a cyclical lending sector, it has increased sales from $394 million in 2019 to $746 million in 2023. In the last 12 months, its sales have risen by 17% year over year to $794.3 million. An asset-light business has enabled it to increase its operating income from $107.6 million in 2019 to $316 million in 2023.

goeasy’s second quarter was the strongest in its history, primarily due to record originations, loan book growth, stable credit, and record earnings. It surpassed $4 billion in gross consumer loan balances and added $450 million of debt funding capacity, solidifying its position as a leader in Canada’s non-prime consumer credit market.

In the second quarter (Q2), goeasy’s credit application volume rose 34% to 665,000, while loan originations rose 24% to $827 million.

goeasy stock continues to grow at an enviable pace despite a challenging macro environment. It currently trades at a 27% discount to consensus price target estimates.

Restaurant Brands International stock

Valued at $43.4 billion by market cap, Restaurant Brands International (TSX:QSR) is among the largest companies in Canada. It owns and operates quick-service brands such as Burger King, Tim Hortons, Popeyes, Firehouse Subs, and Carrols.

In 2023, Restaurant Brands reported system-wide sales growth of 12% year over year as revenue surpassed US$7 billion and its net income totalled US$1.7 billion. The potential for restaurant growth across smaller brands such as Carrols and Firehouse Subs should be a key driver of sales in the upcoming decade.

For instance, Firehouse Subs ended 2023 with 1,200 locations and US$1.1 billion in system-wide sales. Restaurant Brands recently closed the acquisition of Carrols and is now working to remodel 600 locations over the next four years, allowing it to re-franchise most of the portfolio to smaller owner-operators.

In the June quarter, Restaurant Brands International grew comparable sales by 1.9% while net restaurants were up 4%, increasing system-wide sales by 5% and adjusting operating income growth by 9.3%.

The fast-food chain is now focused on strengthening its long-term positioning in the U.S. and China, the world’s two largest economies.

Priced at 20 times forward earnings, QSR stock is reasonably priced, given that its earnings are forecast to grow at a compound annual growth rate of almost 12% in the next five years. Moreover, it also offers shareholders a forward dividend yield of 3.3%.

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 Aditya Raghunath has no position in any of the stocks mentioned. The Motley Fool recommends Restaurant Brands International. The Motley Fool has a disclosure policy.

More on Dividend Stocks

Piggy bank in autumn leaves
Dividend Stocks

CPP Pensioners: You’re Getting an Inflation Increase in 2025

CPP benefits increase with inflation, but this stock's dividends can outpace even that.

Read more »

coins jump into piggy bank
Dividend Stocks

Invest $15,000 in This Dividend Stock for $61 in Monthly Passive Income

Monthly passive income is well within reach, especially when you have a solid dividend stock like this on hand.

Read more »

RRSP (Registered Retirement Savings Plan) on wooden blocks and Canadian one hundred dollar bills.
Dividend Stocks

RRSP: 2 Reliable Canadian Dividend Stocks to Own for Decades

These stocks offer high yields and a shot at decent capital gains.

Read more »

concept of real estate evaluation
Dividend Stocks

Invest $7000 in This Dividend Stock to Make $600 in Passive Income

Looking to make monthly passive income? Timbercreek Financial (TSX:TF) stock's 8.6% dividend yield could turn into a steady stream of…

Read more »

space ship model takes off
Dividend Stocks

Dividend Investors: 2 Stocks That Could Soar in 2025

These top TSX dividend stocks might be oversold right now.

Read more »

Start line on the highway
Dividend Stocks

TFSA Passive Income: 4 Stocks to Buy and Never Sell

Looking for stocks that create perfect passive income? This TFSA dream team is the perfect portfolio just waiting to happen.

Read more »

analyze data
Dividend Stocks

Is Canadian Tire Stock a Buy for its 4.4% Dividend Yield?

Canadian Tire may have a current dividend yield of 4.4%, but that's not the only reason to buy the high-quality…

Read more »

TFSA (Tax free savings account) acronym on wooden cubes on the background of stacks of coins
Dividend Stocks

How to Use Your TFSA to Make $5,985/Year in Tax-Free Income

Investing in First National Financial (TSX:FN) stock could produce $5,985/year in tax-free passive income.

Read more »