One of the top TSX stocks I remain most bullish on in this environment has to be Restaurant Brands (TSX: QSR). Shares of this leading quick-service restaurant provider have been on a roller-coaster ride lately, one that’s been nauseating to a certain degree.
That said, Restaurant Brands has seen its share price come back of late and start trending back in the right direction. Here’s why I think the Tim Hortons and Burger King parent could be among the most compelling investments in the market right now.
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Ignore the noise around fundamentals
Restaurant Brands has proven itself to be a viable and compelling long-term investment due to its underlying fundamentals. Supported by world-class banners in the fast-food space, the company has seen its revenue surge to $8.4 billion over the past year, with $2.5 billion of this total amounting to operating income.
That’s a lot of operating profit, and on a bottom-line basis, Restaurant Brands has shown its ability to keep a significant chunk of these profits as net earnings. Accordingly, with a dividend yield of 3.5% and a forward price-to-earnings ratio of around 13 times, it’s hard to find a stock that’s this attractively priced in the $50 billion market cap world, at least in my view.
Restaurant Brands has seen some noise flow through in its most recent results, with same-store-sales growth remaining relatively flat and adjusted earnings per share coming in below analyst expectations. However, with momentum expected to pick up during the latter half of the year and Restaurant Brands’s status as a leading defensive stock, I think these numbers are more noise than signal right now.
Is this stock a good buying opportunity?
In my view, Restaurant Brands has one of the best management teams in its space, and while there is certainly work to be done on improving the company’s quarterly results moving forward, I think there are the right pieces in place to make this happen.
Restaurant Brands is a mature player in a mature industry with a strong market share in its core markets. As the company continues to expand into other high-growth markets (particularly in Asia), I like this stock’s upside potential.
Thus, at 13 times forward earnings with its current dividend yield and growth upside, I find few more compelling options on the TSX right now.
