Where to Find Stock Deals as TSX Starts to Rally

Restaurant Brands International (TSX:QSR) stock is one of the stocks that can keep moving higher from here, even without the TSX’s support.

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The TSX Index has been on a rather muted run year to date, with just 2% gains. That’s well below the S&P 500 and Nasdaq 100. As market strength (and bullish heat) in the U.S. begins to spread to Canada, some value-oriented names could benefit considerably as we roll into the end of the year.

Undoubtedly, the TSX rally has been slow and steady. This pace leads me to believe that there’s far more value to be had on this side of the border. Further, a stock market correction may not be nearly as punishing to the TSX, given its relative lack in growth and tech stocks. Further, the TSX isn’t as heavily weighted in just a handful of names that could make or break the index.

Without further ado, we’ll have a closer look at two TSX stocks that I think are of great value, even as broader market strength begins to dissipate. Not all companies will “lose” when a recession happens and markets, as a whole, begin taking a few steps backward!

There are plenty of impressive names that may have what it takes to shrug off all the broader macro negative en route to higher levels. Consider Restaurant Brands International (TSX:QSR) and TD Bank (TSX:TD): two names that I think will end the year higher, even if the TSX dips back into the negative.

Restaurant Brands International

Restaurant Brands International (RBI) is a fast-food gem that has its bases pretty well covered in the realm of quick-serve restaurants. The company is behind Tim Hortons, Burger King, Firehouse Subs, and Popeyes Louisiana Kitchen.

For many years, it seemed like RBI bit off a tad more than it could chew with the three brands underneath the hood. Nowadays, the firm seems to have found a formula to bring back the sales and momentum in its stock. Ironically, RBI, a firm that used to be big into cost cuts, is now investing a huge amount into its brands at a time when cost cutting has become standard across a wide range of industries.

RBI is already seeing investments pay off over at Burger King. I think there’s more value to be had, as RBI looks to replicate success at its other brands. And finally, let’s not forget about expansion potential. The company is taking Tim Hortons to South Korea in a low-risk/high-reward move that could add fuel to the stock rally.

I think the 23.1 times trailing price to earnings fails to fully consider the recession-resilient growth the firm is capable of.

TD Bank

The bank stocks have really underwhelmed of late. But don’t count on TD Bank stock going down without a fight as the recession nears. The bank is flush with capital. That’s never a bad thing in a rising-rate world. Though no deals are expected anytime soon, I think investors can look forward to being spoiled by some generous dividend hikes over the next few years.

Further, TD stock trades at just 10.55 times trailing price to earnings. Are there pressures weighing? Sure, but TD’s managers are well-seasoned to overcome any macro obstacles. With expectations modest, I view the bank as a terrific buy for any value investor looking to outpace the TSX Index over time.

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 has positions in Restaurant Brands International and Toronto-Dominion Bank. The Motley Fool recommends Restaurant Brands International. The Motley Fool has a disclosure policy.

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