Some of the best investments to buy are ones that can provide a recurring revenue stream and handsome growth potential — even more so if the stock offers a juicy, secure dividend, which can help make almost any stock a buy.
One perfect example is Restaurant Brands International (TSX: QSR). Here’s a look at whether or not Restaurant Brands International stock is a buy right now.
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Meet Restaurant Brands International
Restaurant Brands International is the name behind some of the largest quick-serve brands on the market. This includes Burger King, Tim Hortons, Popeyes, and Firehouse Subs.
Collectively, the company operates over 30,000 restaurants across 120 countries, making it a true global icon. Another key point is the often-dismissed diversified appeal of those brands. Each represents different tastes with unique menus and insane expansion potential.
Some of that growth includes the rapid expansion of the Tim Hortons brand internationally to new markets such as China. In fact, Restaurant Brands boasts over 900 stores across 71 cities in China.
Tim Hortons isn’t the only brand boasting strong growth in China. Earlier this summer, Restaurant Brands acquired Popeyes’s China business, which includes over a dozen stores.
That growth potential alone makes the stock a buy, but there’s much more to love about Restaurant Brands.
Let’s talk results
As of the time of writing, Restaurant Brands trades just shy of $100, somewhat in the middle of its 52-week range. Year to date, the stock trades down nearly 6%, but this quickly turns into the black over longer periods, with the one-year and five-year returns sitting at 6.7% and 14.56%, respectively.
If anything, that slump in stock price represents an intriguing time for prospective investors to grab a position in Restaurant Brands at a sub-$100 level.
In terms of quarterly updates, Restaurant Brands is set to report on the third fiscal next week. Until then, we can look back at the second-quarter results.
In the second quarter, Restaurant Brands reported income from operations of US$663 million, reflecting an increase over the US$554 million reported in the same period last year. The company saw system-wide sales register a 5% bump year over year, while restaurant growth saw a 4% uptick.
Overall, Restaurant brands reported net income of US$399 million, or US$0.88 per diluted share, in the quarter. This was a noted improvement over the US$351 million, or US$0.77 per diluted share, in the prior period.
Is the stock a buy right now?
Restaurant Brands has many positive takeaways. The company is coping well, if not better than many of its peers, when it comes to shrinking margins stemming from the rising costs we’ve seen over the past few years.
The company has also taken an aggressive stance on growth, with both international expansion of its brands and renovations to existing stores taking priority.
Another key point to note is Restaurant Brands’s dividend. The 3.22% yield isn’t the best return on the market, but it is covered, growing and, in my opinion, a worthy addition to any well-diversified portfolio.
