Restaurant Brands International (QSR-T)

High quality. Recognizable brands. Stream of revenue from franchisees. Efficient management team, not afraid of innovation. A lot is riding on the new CEO. Pricing power. 30% ROE. 20x earnings. If price dropped to $90, buy more aggressively. Yield is 3%.

It has a new CEO who did very well with Dominoes. The franchises are now much better run. There are good changes at Tim Horton's, Burger King has a big ad campaign, and Popeye's is growing very fast. It is trading at 2/3 of the multiple of other fast food chains. Yes there are higher labour costs but it is a high margin business and recession resistant. He feels it is cheap because of past problems and has a big upside. In general people are now spending lots of money dining out.     Buy 15  Hold 15  Sell 1

It has done well, but the valuation is not compelling. Shares are always too high for him. Yes, Restaurant is picking up after Covid, but consumers are cutting back on discretionary purchases like coffee.

He'd take BCE in a heartbeat from a safety aspect. Better yield, cheaper valuation, growth is tied to the economy. QSR has done a good job with its divisions, though Tim's has been a challenge. Profits are now being squeezed pretty dramatically. He's nervous on consumer stocks.

Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. Good recovery potential as restrictions ease. Has strong cash flow and has a focus on their large brands (eg. Tim Hortons, Burger King, Popeyes). Could acquire other strong restaurant brands in the future. 14x EV to EBITDA. Good dividend. Unlock Premium - Try 5i Free