New Investors: 1 Stock I’d Buy in a Market Correction

Restaurant Brands International (TSX:QSR)(NYSE:QSR) is a wonderful company at a wonderful price as we head into March 2022.

| More on:

It’s official. The stock market (the S&P 500) officially fell into a correction (that’s a 10% drop from peak to trough), moving just below those ominous January 2022 lows. Undoubtedly, those who’d bought on the fake bounce back were punished harshly. Although we’re inching closer towards a bear market, thanks in part to geopolitical tensions and the anticipation of fast Fed rate hikes, I think that new investors should not be looking to time their entry into this market. I fear that many investors may be asking the wrong questions at this juncture.

Instead of asking when the markets will bottom or how much pain could be ahead, investors should conduct a valuation to determine which stocks are undervalued today. Indeed, a top-down approach may be used by many. Still, a bottom-up approach (starting with the individual company’s valuation before the macro conditions) may be the way to go, as Mr. Market has a temporary period of inefficiency.

Market correction: New investors should look to buy value

Like it or not, the U.S. yield curve is flattening again. If it inverts, recession fears could take hold, but such an indicator should not be taken as gospel. In any case, the Fed has a hard job, as it takes into account the Ukraine-Russia crisis and how it will impact plans to hike rates. Will the schedule be delayed? It’s possible. Regardless, inflation is a major threat right now, and savers are pretty much guaranteed to lose ground.

For new investors, I’d recommend keeping it safe and straightforward with easy-to-value stocks. Simple businesses with robust cash flows and a narrative that’s unlikely to change due to an exogenous shock event, whether it be a Ukraine invasion or the emergence of yet another COVID variant of concern.

Without further ado, please consider shares of Restaurant Brands International (TSX:QSR)(NYSE:QSR), one sleep-easy stock to ride out this market correction.

Restaurant Brands International

Restaurant Brands has been weighed down heavily by the COVID pandemic, but the times are changing for the better, at least from the pandemic front. Omicron cases are falling, and we could be on our way to post-pandemic normalcy. Given QSR has been one of the most-affected fast-food firms, given its lack of drive-thru and delivery capabilities versus some peers, I’d argue QSR has the most upside once the tides finally turn and things become normal again.

The stock has been slogging for years now. But the company has become so much better, with investments in organic growth and digital efforts. Further, the company has Firehouse Subs, a fourth brand, that could give a modest jolt to growth, as the firm gets back to expanding at the international level. Indeed, QSR has an opportunity to open new stores in areas where restaurants were forced to shut down due to COVID.

Bottom line for new investors

With a solid dividend, I’d look to buy QSR stock on any further weakness. It’s a value play and dividend stock rolled into one. And its growth edge, I believe, could make a return this year if COVID is conquered.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Joey Frenette owns Restaurant Brands International Inc. The Motley Fool recommends Restaurant Brands International Inc.

More on Stocks for Beginners

The virtual button with the letters AI in a circle hovering above a keyboard, about to be clicked by a cursor.
Tech Stocks

Emerging Canadian AI Companies With Big Potential

These tech stocks are paving the way to an AI-filled future, but still offer enough growth ahead for a strong…

Read more »

Young Boy with Jet Pack Dreams of Flying
Tech Stocks

Is Constellation Software Stock a Buy, Sell, or Hold for 2025?

CSU stock has long been a strong option for high growth, high value stocks. But are there now too many…

Read more »

hand stacks coins
Dividend Stocks

3 Ultra-High-Yield Dividend Stocks You Can Buy and Hold for a Decade

These three high-yield dividend stocks still have some work to do, but each are in steady areas that are only…

Read more »

Asset Management
Stocks for Beginners

TFSA: 4 Canadian Stocks to Buy and Hold Forever

Thinking about what to buy with the new TFSA contribution space in 2025? These four Canadian stocks are worth holding…

Read more »

concept of real estate evaluation
Stocks for Beginners

2 No-Brainer Real Estate Stocks to Buy Right Now for Less Than $1,000

These two real estate sector-focused stocks have the potential to deliver strong returns on your investments in the coming years.

Read more »

engineer at wind farm
Energy Stocks

Invest $20,000 in This Dividend Stock for $100 in Monthly Passive Income

This dividend stock has it all – a strong outlook, monthly income, and even more to consider buying today.

Read more »

stocks climbing green bull market
Stocks for Beginners

3 TSX Stocks Soaring Higher With No Signs of Slowing

Don't ignore stocks just because they look like they're at a high price. Instead, see exactly why they've driven so…

Read more »

Middle aged man drinks coffee
Dividend Stocks

Here’s the Average TFSA Balance at Age 35 in Canada

At age 35, it might not seem like you need to be thinking about your future cash flow. But ideally,…

Read more »