Written by Joey Frenette at The Motley Fool Canada
Depending on who you ask, September can be a pretty bad month to put new money into stocks. There’s no doubt that September saw some really panicked sell-offs. And while it’s not an ideal time to be a net stock buyer seasonally, especially since Warren Buffett’s firm has been selling quite a bit of stock lately, I think it’s a bad idea to base investment decisions on something as arbitrary as the current month. September may have a bad reputation among some, but I don’t think you can escape the chaos by procrastinating on a coupon during back-to-school season.
With stocks currently recovering from a summer sell-off, I would argue that the seasonal correction (at least in the Nasdaq 100) has arrived early this year. And if markets move past September and election season with ease, expect headlines focused on the so-called Christmas rally. Avoiding stocks in September can be as bad an idea as chasing them in December. Ultimately, your best bet would be to buy stocks on your radar that you think are undervalued and sell those that you think are overvalued. Everything else is secondary.
In this article, we’ll look at one of the best dirt cheap TSX stocks for the month of September. And while a correction (or something similar) could still be coming, I think it’s a better idea to stay the course and buy on dips rather than making any kind of exit plan. Remember, you don’t just have to time the stock market to beat the markets over the long term. In fact, trying to time it right could lead to less than satisfactory results.
Restaurant Brands International
Restaurant Brands International (TSX:QSR) is a quick service restaurant company that just doesn’t get the respect it deserves. The company’s earnings have steadily improved over the years, and with tremendous growth potential internationally, I just don’t understand why the stock trades so cheaply compared to most of its other competitors in the fast food scene.
The company owns popular brands like Tim Hortons, Burger King, Firehouse Subs, and Popeye’s Louisiana Kitchen. As the company tries to win back fast-food customers with lower-priced options and menu innovations, the stock could see a run well above all-time highs in the fourth quarter. In fact, fast-food stocks have all fallen in recent quarters as the tide went down. Still, I find it hard to believe that the company’s recent less-than-stellar sales growth numbers are the start of a negative trend.
There’s no doubt that the last few years have not been impressive, with QSR stock down 5%. However, given the low expectations and dirt-cheap multiple, I wouldn’t bet against the stock not making up for lost time in the next three to five years.
The company is investing in all the right areas and with a juicy dividend yield of 3.3%, QSR stock stands out as one of the better dividend yielders with low costs. With a P/E ratio of 17.4, QSR stock seems more than undervalued while trading for almost $95 per share.
The broader fast-food scene appears to be emerging from the fog of inflation-related headwinds. As Restaurant Brands introduces interesting new menu items across its portfolio of brands, I believe it’s only a matter of time before Mr. Market realizes how unfairly he has punished the stock.
The post “1 Dirt-Cheap TSX Stock to Buy in September 2024” first appeared on The Motley Fool Canada.
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Further reading
Fool contributor Joey Frenette holds positions in Restaurant Brands International. The Motley Fool recommends Restaurant Brands International. The Motley Fool has a disclosure policy.
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