Legendary investor Peter Lynch once said that investors should “invest in what they know.” Now, that extends well beyond just understanding the financials and the growth plan, but actually setting foot in the trenches as a customer. Undoubtedly, if you’re a frequent customer of a business, you probably know more than some professional investment manager who has never tried a product.
Whether we’re talking about athletic apparel, a restaurant, or a lifestyle brand, perhaps there’s nobody who knows the product better than someone on Main Street who understands the value beyond what’s on the surface. Lynch’s “mall” strategy focuses on what his family members are buying when they go to the local shopping centre. Undoubtedly, the same could apply to you if you’re a fan of a certain product and find that the stock doesn’t accurately reflect the long-term trajectory and value proposition.
Whether we’re talking about burrito bowls, technologies you use, or the convenience factor (which buys you time back), excellent products might point you in the direction of excellent stocks. And, in this piece, we’ll look at two terrific stocks behind Main Street staples that Bay Street might be overlooking.
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Alimentation Couche-Tard
Alimentation Couche-Tard (TSX: ATD) is a convenience store icon that most probably don’t think too much about after they’re done their quick mini-hauls. Whether you grab a Polar Pop and a wrap to go or stock up on fruits and ice cream while enjoying a Guy Fieri-inspired ready-made meal, you’d be surprised how many people in Canada and around the world make good use of the local Circle K or Couche-Tard.
In any case, convenience is a business that could continue to pay off as Couche-Tard aims to further enhance its merchandise mix (hot food, fresh food, and private-label munchies for those looking to save time and money). The stock itself is having a breakout moment, soaring close to 11% year to date. It took a growth-to-value rotation to bring the momentum back to shares of ATD. But I do think Couche-Tard is more than a convenient place to shop; it has optionality to acquire its way to greater growth.
With a strong balance sheet and enough buying power to scoop up a fairly sizeable firm, I’d not shy away from Couche-Tard as investors come to respect its more defensively-minded growth profile. It’s the ultimate anti-AI stock, and it might be a stealth winner as rates fall and consolidation activity rises. Even at 22.2 times trailing price-to-earnings (P/E), the stock looks too cheap.
Jamieson Wellness
Many of us take our vitamins every single day, and if there’s a green cap on the bottle, you’re probably a loyal customer of Jamieson Wellness (TSX: JWEL). With health and wellness on everyone’s mind, it’s tough to get in the way of Jamieson, especially as it expands beyond Canada for growth.
The Chinese market is one area for growth, as Jamieson looks to turn its cherished brand (which is a stamp of quality) into an international growth engine. What’s most impressive about Jamieson, in my view, is the dividend, which sits at 2.4%.
It’s poised for growth and could keep income investors well-nourished as they wait for the multi-year growth story to play out. The stock is up over 16% year to date and might be one of the best low-tech plays to ride the growth-to-value rotation out as it extends into the second quarter.
