If you’re like many self-guided investors, you’re probably looking for ways to get a leg up going into the new year. Indeed, beating the stock market is tough to do consistently unless you’re benchmarking against the TSX Index.
As some pundits call for returns for the S&P 500 look to be more modest (think single-digit annualized gains) in the coming years, many investors may be seeking alternative areas where they can keep their long-term returns in decent shape without having to take on additional amounts of risk. In the face of lower prospective returns, you need to adjust your expectations and perhaps think a bit differently than most other investors.
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Could the TSX top the S&P 500 in 2025? This pundit seems to think it’s time to buy Canadian
So, whether the S&P 500 is destined to go up, down, or sideways, you should have a plan to stay invested for the coming years. Brian Belski, the chief investment strategist at BMO Capital Markets, believes that the TSX Index is poised to do better than the S&P 500 in 2025. Indeed, that’s a bold call and one that I think has a high chance of being proven right.
While the Canadian market is less diversified (it’s quite heavy financials and energy names), the lack of tech exposure, I believe, may just help the TSX Index sidestep a potential tech-focused stock selloff. While only time will tell if the artificial intelligence (AI) boom will pave the way for a nasty decline reminiscent of the 2000 dot-com collapse, I think that sticking with simple, boring, cheap stocks may be the way to go.
Whether these types of names help the TSX Index triumph over the S&P 500 next year, though, remains the big question. Either way, here’s one TSX growth stock that may shine even if the S&P 500 begins losing some of its lustre after an exceptional past couple of years.
Restaurant Brands International
Restaurant Brands International (TSX:QSR) is a fast-food powerhouse behind Tim Hortons, Popeyes Louisiana Kitchen, Burger King, and Firehouse Subs. Despite the untapped growth potential behind the broad basket of robust brands, the firm may still have an appetite for another brand acquisition going into the new year.
Indeed, speculation has swirled that the fast-food firm may be interested in grabbing a slice of the pizza market amid recent industry pressures. Even without a deal lined up for the next few years, I’m a fan of the name as it attempts to move forward with its impressive growth strategy. The latest quarter may have been lukewarm as sales stalled amid the difficult economy.
Still, in the longer term, I’d hang onto QSR as it looks to expand its global store footprint while seeking to make moves to boost same-store sales. The 17.2 times trailing price-to-earnings (P/E) multiple is severely depressed. And the 3.34% yield, I believe, is incredibly underrated.
Bottom line
At the end of the day, the quick-serve restaurant scene is moving through an unprecedented time. As value arises from the inflationary storm, I view QSR as a prime candidate to take a bit of market share away from rivals. Notably, Burger King has shown it still has what it takes to reclaim the crown.
Meanwhile, the other three brands also have a lengthy runway, and they can sprint down as rates fall and the firm continues investing in growth.
