Some investors may be growing anxious as November kicks off with a bit of volatility. Sure, a 1% down day for the S&P 500 is hardly anything in the grander scheme of things. But when combined with all the AI bubble chatter and questionable responses to what have been, at least for the most part, some very good quarterly earnings results from big tech companies and AI names, it’s not hard to think that we’ve entered the beginning of a correction or something of the sort.
Undoubtedly, a 1-2% move lower is healthy, especially after the latest surge higher, but, for some reason or another, the past few sessions have felt rather uncomfortable. And while it feels uneasy to buy the dip, realizing the S&P is down just over 2% from its high, I still think focusing on the long-term game plan is the best approach.
At the end of the day, down days are how smart contrarian investors can score slight discounts on names. Personally, I do not fear an AI bubble, though I don’t fault investors for shying away from some of the high-multiple growth stocks with AI narratives at a time like this. Still, I don’t think the glorious gains of the past few years will last forever. At some point down the road, there will be a few potholes we’ll need to run over. And the key for investors is not panicking and sticking with the names that you believe in for the long term.
If stocks continue their slide and the Santa rally is off the table, then, sure, it’ll feel like the AI bubble is bursting. But in reality, it will be a correction in the overheated names that may or may not also dry down the names that were already fairly valued or even a tad undervalued prior to the market-wide disturbance.
So, if you’re a nervous new investor, focus on value and growth. If your long-term thesis is correct, you don’t need to make too much of the near-term fluctuations. If anything, you should hope for shares to go lower so that you can double down on your position, as cliché as that sounds.
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Restaurant Brands’s stock climbs back
At this juncture, Restaurant Brands International (TSX: QSR) really stands out as a growth play worth getting behind after its robust quarterly earnings results. Shares are up over 3% in the past week, thanks in part to the strength in Tim Hortons, which helped fuel a nice single-digit same-store sales growth (SSSG) boost.
With a lot of menu innovation going on at the local Tim Hortons (think festive specials) and delicious protein coffee beverages, it seems like the tides are turning for Canada’s beloved coffee and bake shop. As for Burger King, things have been looking up as well. The only question mark, I thought, was the performance in Popeyes Louisiana Kitchen, which may be more of an outlier than a sign that it’s losing its lustre in the chicken scene. Sure, Chick-fil-A represents a serious rival, but, for the most part, I think Popeyes is just fine.
Altogether, Restaurant Brands had a solid number, and things could brighten in the next couple of years as it invests strategically in expansion and SSSG drivers. At 24.3 times trailing price to earnings (P/E), with a 3.74% yield, shares look like a steal as Restaurant Brands gets back on the growth track. I think the brands have market share-taking potential, and if they do, get ready for a growth re-acceleration that helps QSR stock power back.
