It’s been a pretty ugly August for stocks, with the broader indices losing a bit of ground after a running start to the year. Indeed, even the most robust bull markets can stumble en route to higher levels.
Although the back-to-school season can be a jittery time to put new money to work in stocks, I think brave contrarians should view the tough August not as a setback but as a mini-sale on the broader basket of stocks. If a stock on your radar has dipped this month, it may be time to consider hitting that buy button, even if a scary September follows what’s been an awful August!
Without further ado, let’s look at three stocks (two Canadian and one American) that I think could be overdue for a bit of a bounce back by year’s end.
TD Bank (TSX:TD) took yet another hit from Mr. Market following the release of some pretty weak quarterly earnings results. At around $82 per share, TD stock sports a dividend yield of 4.78%. And though Monday’s session provided some relief, I still think there’s ample value to be had in the Canadian banking behemoth and Canada’s second-largest firm.
There was no sugar-coating the recent numbers, which saw TD Bank miss the mark, as profits slipped while provisions rose. The U.S. retail business was a bit of a weak spot for the bank. In any case, I think the tough result is more of a buying opportunity for those who seek a top-tier bank at a modest price tag. The stock trades at less than 11 times trailing price to earnings and seems like a great value for any income-oriented value investor.
When will TD start rallying again? It’s hard to tell. The road ahead certainly looks tough, but the valuation seems to already reflect such. Between now and the year’s end, I’d not be shocked if shares are much higher than $82 per share.
Restaurant Brands International
Restaurant Brands International (TSX:QSR) is the firm behind such names as Tim Hortons, Burger King, Popeye’s Louisiana Kitchen, and Firehouse Subs. The company seems to have turned a corner, with smart new hires, like Patrick Doyle for Burger King in the U.S. market. Further, the firm seems better equipped to grow its brands from here, as it commits to investing in key areas such as tech, marketing, and menu innovation.
The new QSR, I believe, is a wonderful defensive growth stock. And I don’t think 20.8 times trailing price to earnings reflects the quality of the business you’re getting. With a 3.19% dividend yield and a recent 10% correction to buy on the dip, QSR ought to be atop the shopping lists of Canadians going into autumn 2023.
The currency rate may stink for Canadians, with the loonie dragging its feet in recent months. However, I still think Microsoft (NASDAQ:MSFT) stock is a name worth pursuing while it’s fresh off a 12% pullback from highs. Today, shares are inching higher and could be in a spot to hit new highs by December.
Undoubtedly, the stock’s a bit on the pricey side at 33.4 times trailing price to earnings. However, given its artificial intelligence (AI) talent, Microsoft is a unique tech titan that Canadians should seek to pick up whenever the market waters get rough.
AI is a big deal. And Microsoft is a great way to add such exposure to your Tax-Free Savings Account or Registered Retirement Savings Plan!
Before you consider Microsoft, you’ll want to hear this.
Our market-beating analyst team just revealed what they believe are the 5 best stocks for investors to buy in August 2023… and Microsoft wasn’t on the list.
The online investing service they’ve run for nearly a decade, Motley Fool Stock Advisor Canada, is beating the TSX by 26 percentage points. And right now, they think there are 5 stocks that are better buys.
See the 5 Stocks
* Returns as of 8/16/23
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Fool contributor Joey Frenette has positions in Restaurant Brands International and Toronto-Dominion Bank. The Motley Fool recommends Microsoft and Restaurant Brands International. The Motley Fool has a disclosure policy.