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Restaurant Brands International Inc. (QSR $107.17)
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Premium Brands Holdings Corporation (PBH $87.38)
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A & W Food Services of Canada Inc. (AW $35.26)
Q: Hello 5i,
Since June 2025 AW has not moved. It reached $40 in July of 2025 but has since dropped back to $36. Do you see it as going anywhere, should I hang on as a value investor or move the funds into PBH, or even add to my 3 lowest to shore them up even though they are doing well.
Thank you for your great service
Since June 2025 AW has not moved. It reached $40 in July of 2025 but has since dropped back to $36. Do you see it as going anywhere, should I hang on as a value investor or move the funds into PBH, or even add to my 3 lowest to shore them up even though they are doing well.
Thank you for your great service
5i Research Answer:
AW spiked into the summer of 2025, right around when most consumer discretionary stocks peaked. Growth is quite modest for AW, but its margins are expanding, and it generates solid free cash flows. It is reducing its debt load, it has a decent balance sheet and a good yield of 5.4%, but forward growth estimates are fairly muted and it trades at 14X forward earnings. We would not expect much in the way of capital appreciation, but it is decent for an income name.
We would give PBH the slight edge today given its similar valuation, higher growth expectations, and decent yield of 3.9%. Another name that we would prefer slightly over PBH today is QSR.