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Premium content from Motley Fool Stock Advisor
We here at Motley Fool Stock Advisor believe investors should own at least 15 stocks. Our yearly list of “Starter Stocks” is our attempt to answer a simple question: “Where do I go first?”
If you’re a new investor, we suggest you pick three Starter Stocks that interest you and use them to help build out a portfolio of at least 15 stocks. And if you’ve been investing for a while and already own some companies, we think these stocks have what it takes to strengthen any portfolio.
You should feel comfortable holding these stocks for the long haul; not only do they have the strength to ride out downturns, but they’re also built for powerful growth.
Stock Advisor “Starter Stock” Pick #1:
MTY Food Group (TSX:MTY)
One of our longest-standing recommendations in Stock Advisor, MTY Food Group (TSX:MTY) is a company that touches many of our lives on a regular basis. We just might not know it.
MTY is largely a franchisor of quick-service restaurant banners. The likes of Baton Rouge, Mucho Burrito, Mmmuffins, and Thai Express all fall under MTY’s empire. These, though, are just a fraction – because 80 brands all butter our bread, so to speak. These 80 brands are run independently but combined comprise a retail network of 6,606 locations, at last report, that span North America.
Revenues from franchise locations largely consist of royalty and franchise fees, which translates to an incredibly capital-light business model. In turn, we’re dealing with a business that’s akin to a cheque-cashing machine. Money comes in and there are only a few places for that money to go – all of which are in service to long-term shareholders like us. Growth by acquisition is the name of MTY’s game and historically this has been the primary avenue for deploying the gusher of capital that comes through the door. But a modest dividend and share buyback activity has crept into the mix.
Given the pandemic, we’re also looking at a business that’s been stress-tested to the extreme in recent years and came through with flying colours. From here, we see much more of what we’ve come to love about this company during our nine years of getting to know it in Stock Advisor.
If the next decade is as productive as the past decade has been, MTY will have more than proven itself worthy of its inclusion in our collection of Starter Stocks.
