This market is one that’s certainly difficult to assess. On the one hand, we’ve seen more uncertainty unfold than in a long time. On the other, shares of world-class companies such as Restaurant Brands (TSX:QSR)(NYSE:QSR) are starting to look very attractive. Indeed, Restaurant Brands stock is one I’ve been pounding the table on for a long time. Right now, this company looks ultra-appealing.
Let’s dive into why long-term investors may want to consider Restaurant Brands stock right now.
Inflation-resistant business model bullish for Restaurant Brands stock
Concerns about inflation are real. We’re seeing input costs increase almost across the board right now. This ongoing Russian invasion of Ukraine is hitting commodities such as wheat, corn, and soybeans hard. The impacts these inputs will have on bread, donuts, and meat (cattle feed), which happen to be two key inputs for Restaurant Brands’s businesses, are clear.
However, Restaurant Brands appears to be on the offensive on this front. The company has announced menu price increases to get in front of inflation. In particular, the company’s Tim Hortons banner has put plans in place to raise prices over the coming months.
Some of this is due to supply chain issues which have been in place for some time. However, it’s likely that Restaurant Brands will be forced to raise prices across all its banners.
The thing is, this conglomerate of world-class banners is one I think has the ability to pass on price increases to its customers. Additionally, the company’s management team has made it clear that operational efficiency is of utmost importance. Overall, the company’s business model is one I think can stand up to these inflationary concerns. Accordingly, I remain very bullish on Restaurant Brands stock.
Strong financial results and expansion plans
Restaurant brands recently reported its Q4 and full-year results. In this release, the company noted impressive cash flow growth. For fundamentals-oriented investors, this is a good thing.
Restaurant Brands plans to carry out vital investments as well as return capital to shareholders to the tune of $1.5 billion this year. That likely means more dividend increases, on top of the company’s current 3.9% yield. With Firehouse Subs being brought into the mix, there’s a lot to like about this company’s growth profile moving forward.
Additionally, one highlight that’s worth pointing out is the company’s digital sales. Restaurant Brands reportedly saw Digital sales increase to $10 billion, representing 30% of its overall business. Should these trends continue, there’s a lot to like about Restaurant Brands’s growth profile from here.
Bottom line
There are too many catalysts to count for Restaurant Brands stock. This company is one that is set up nicely to combat inflation. Additionally, strong results are likely to continue from here.
Long-term investors looking for a portfolio staple can’t go wrong owning this stock right now, in my view.
The post 1 More Reason Why Restaurant Brands Stock Is a Buy Right Now appeared first on The Motley Fool Canada.
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Fool contributor Chris MacDonald owns Restaurant Brands International Inc. The Motley Fool recommends Restaurant Brands International Inc.