As most other new investors chase the hottest stock on the market while pursuing the most euphoric trends on Wall Street (whether that’s AI, quantum computing, fintech, or something else), there’s absolutely zero shame in going against the grain with a boring, simple, value-focused approach that allows you to get some better sleep at night. Indeed, whenever you’re hunting down the next multi-bagger by looking at past returns, it can be like driving while looking at the rearview mirror instead of the road ahead.
And while it never feels good to be sitting out a swift doubling, tripling, or even a quadrupling over a concise timespan, I think that new investors must understand that momentum and volatility can work both ways. Without a careful analysis of the financials and growth profile, a high-momentum mover can act as a double-edged sword, especially if you’re buying in after a lengthy run, one that may not continue after you’ve punched your ticket.
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Restaurant Brands stock: A sleep-easy kind of dividend-growth gem
In any case, Restaurant Brands International (TSX:QSR) stands out as a perfect contrarian option for passive-income seekers who’d rather sleep like a baby than be kept up all night by the volatility that could be in store for tomorrow’s trading session. Indeed, that hot artificial intelligence stock that’s doubled could be in for a double-digit percentage point decline on any given day. And unless you’re a seasoned trader, such plays probably aren’t the best places to look if you want value, yield, and a lesser degree of volatility.
At the time of this writing, shares of QSR have a nice 3.77% yield alongside a 0.63 beta, which entails less correlation to the rest of the stock market.
Additionally, shares look quite cheap at 13.48 times forward price to earnings (P/E). For a fast-food titan behind brands such as Tim Hortons, Burger King, Popeyes Louisiana Kitchen, and Firehouse Subs, with the potential to pick up even more fast-food chains via mergers and acquisitions in the future, I find the forward P/E ratio to be ridiculously undervalued.
Are there challenges going on behind the scenes as management navigates a tricky environment for the consumer?
Of course, there are. With a seasoned management team and not a heck of a lot in the way of expectations for the next few quarters, I’d argue that there’s a stage set for a potential breakout in the second half. Indeed, a low multiple and low expectations make it easier for a stock to march higher.
And while weak spending could continue to weigh on sales across the board for some time, I think that investors are paying too much emphasis on the next quarter and too little on the next three, five, and eight years.
Bottom line
Indeed, when it comes to QSR, it’s well-equipped to ride out the headwinds as it executes its longer-term growth story, which I believe will pave the way for more earnings and dividend growth. For now, collect the nice dividend and sleep well as QSR positions itself to ride out the rest of the choppy macro climate.
