TFSA Investors: 2 TSX Stocks Set to Thrive in the Next Bull Market

Illustration of bull and bear

Nobody knows if the bull market will happen this year, next year, or in a few years from now. Arguably, the bear market is getting too old. Still, since stocks don’t tend to bottom before a recession arrives, there’s always a chance an old bear can get even longer in the tooth.

In any case, TFSA investors should be ready to hit the buy button on a cheap stock on their radar before a bull has a chance to rear its head. Like it or not, we’re in the middle of an unprecedented economic environment. High inflation, rate hikes, and recession fears have worked their way into sentiment. With low expectations, tougher credit conditions, and alternatives beyond equities, it seems like a pretty risky time to be an investor.

Why invest in a bear market when you could just wait for the next bull?

By waiting for the next bull market to come roaring in, you could miss your shot to pick the lowest-hanging fruit in the markets. Indeed, it’s times when risks are perceived to be high when they may actually be lower. On the flip side, when markets only go up, things may be a heck of a lot riskier than the risk-on moves made by investors suggest.

With that, here are two intriguing stocks that I believe are a terrific value after a year of choppiness.

Canadian Tire

Canadian Tire (TSX:CTC.A) is a retailer that’s more than 20% off its 2021 high. At 9.3 times trailing price-to-earnings, I view the well-run retailer as a great way to catch Mr. Market off-guard. Undoubtedly, discretionary retailers feel all the pains that come with cyclical downswings.

As recession hits, Canadian Tire’s sales could slump. But the real question new TFSA investors need to ask is if sales will slump as badly as the consensus estimate. I’d argue Canadian Tire has what it takes to surpass estimates. It’s a well-managed retailer that deserves respect for its performance through COVID lockdowns. The stock crashed hard during 2020, only to recover (and overshoot) in just months.

The latest bear market has dragged out for almost a year. I think shares are closer to the bottom than the top. With a juicy 4.2% dividend yield and recent company director buying activity, I view the retail stock as one of the best bargains in today’s nasty market.

Restaurant Brands International

Restaurant Brands International (TSX:QSR) stock has finally begun trending higher over the past few quarters. Over the years, QSR hasn’t been a very rewarding investment. Despite the rough patch, the company has made changes to upper management. This isn’t the first time QSR shuffled executives around. But there are reasons to believe the firm can get back to its market-beating ways.

The company has strong brands. Now, it seems to have a leader in Patrick Doyle who’s focused on Burger King. I think the market is underestimating Doyle’s skills. Further, I think Doyle could help QSR’s other brands once he’s done helping Burger King climb back to the top of the food chain in the burger scene.

In any case, Restaurant Brands seems like a wonderful value at 19 times trailing price-to-earnings, given a recession is unlikely to weigh it down. After all, fast food still sells when times get rough. Finally, the 3.45% dividend yield is as juicy as a whopper itself!

The post TFSA Investors: 2 TSX Stocks Set to Thrive in the Next Bull Market appeared first on The Motley Fool Canada.

Free Dividend Stock Pick: 7.9% Yield and Monthly Payments

Canada’s inflation rate has skyrocketed to 6.9%, meaning you’re effectively losing money by investing in a GIC, or worse, leaving your money in a so-called “high interest” savings account.

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* Percentages as of 11/29/22

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Fool contributor Joey Frenette has positions in Restaurant Brands International. The Motley Fool recommends Restaurant Brands International. The Motley Fool has a disclosure policy.

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