For investors looking for some of the timelier opportunities in a market that’s starting to show signs of slipping (a correction is never too far away!), it might make sense to consider the boring value names that suddenly became a tad less boring, with a bit of newfound momentum behind them. Undoubtedly, whenever you’ve got a bit of relative momentum, solid fundamentals, and a modest price of admission, you might have the formula for a name that’s still worth buying, even as market sentiment starts getting really bad.
Though stocks aren’t yet oversold, at least on the TSX Index, the S&P is flirting with the halfway point to a correction. And as AI fears and geopolitical chaos continue to make headlines going into the final few weeks of the first quarter, perhaps playing it a bit more defensively could make a lot of sense, even if it means getting into a “rotation” trade a bit later than others.
Sometimes, it can make sense to buy on strength (think a technical breakout) rather than to catch a falling knife on the way down. Either way, from a long-term investor’s perspective, the following two past-month winners look poised for more wins this year.
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Canadian Natural Resources
Canadian Natural Resources (TSX:CNQ) shares are up close to 23% in the past month, thanks in part to the shocking spike in oil prices. With oil flirting with US$100 per barrel again, it’s looking like the resilient energy producers might be in for a bit of a multiple re-rating to the upside.
Of course, who knows where oil will be in a month or a quarter from now? There are just way too many variables to consider before chasing the momentum in oil prices. Fortunately for Canadian Natural, it’s positioned to win, even if oil plunges to where it was before the latest spike or even a bit lower.
With impressive operating economics and a dividend that keeps on growing, I wouldn’t get nervous over the latest monthly melt-up in the stock. If anything, the shares still look as cheap as ever, trading at 12.9 times trailing price-to-earnings (P/E), which beats most other dividend payers with far less dividend growth potential.
With a management team devoted to returning free cash flow to investors (through buybacks and generous dividend increases), I think CNQ ought to be the preferred energy stock to pick up. It’s the biggest and has shown it’s also one of the best.
Restaurant Brands International
Restaurant Brands International (TSX:QSR) spiked around 10% in the past month. And like CNQ, shares are still not even close to being expensive! The stock trades at 13.1 times forward P/E, which is close to the lowest you’ll find when it comes to big-league fast-food firms.
With margins on the uptrend, plenty of room to expand internationally (International is a part of the name), and a formula that’s actually paying dividends, I wouldn’t sleep on the name, as investors‘ hopes for a 2026 breakout grow. Personally, I think management finally has the winning strategy down, with revamped, refreshed, and reinvigorated food items, stores, and branding.
Over the years, the fast food firm shifted gears from cost cuts to very smart, strategic investments. And they’re already showing signs of paying off. Perhaps it’s time to be a buyer now that it has shown signs that it has found a way to win.
Since shares have done next to nothing for three years, I find the latest spike to be compelling from a long-term viewpoint, even if it’s just another blip that’ll result in a quick drawdown.
