One of the best growth companies on the TSX has to be Restaurant Brands International Inc. (TSX:QSR)(NYSE:QSR), for a number of reasons. This is a stock that has underperformed relative to other growth options out there in recent years, and I think there exists a lot of negative sentiment around this stock, and in particular, the company’s Tim Horton’s banner, of late.
Indeed, Tim Horton’s top and bottom line performance has been significantly impacted by the coronavirus pandemic. The company’s other two banners, Burger King and Popeye’s Louisiana Kitchen, continue to outperform and provide the kind of growth investors are expecting. I think this dichotomy of performance is not good for this stock, though I do think Restaurant Brands has the management team in place and the strategic outlook to manage through this short-term underperformance.
Additionally, I think this company, which has been a traditional acquirer of other banners in the past (and that’s how the company came into being in the first place) could be seeking another acquisition this year. Whether it’s a pizza chain or another fast food brand in the burger space, Restaurant Brands has the liquidity and balance sheet room to continue to grow via acquisition.
If we see valuations continue to come down in this sector, I think acquisitions opportunities could become more attractive and likely on the horizon. Acquisition financing hasn’t been this cheap in a while, so I’d suggest investors keep Restaurant Brands on their watch list for new acquisitions in 2021 and beyond.
Invest wisely, my friends.
