It’s hard to think about hanging onto any stock for the next five years, let alone the next seven, especially with so many traders looking to make quick profits over a few weeks, or even a few days. And while things do change rapidly, especially nowadays with the AI revolution going into full swing, I still think that buying with the intent to hold for seven years could make a lot of sense, provided you’re not committing to such a timeframe, regardless of how the circumstances might change. If managers change or a company loses its competitive edge in a way that negatively impacts your estimate of its future cash flows, investors shouldn’t be afraid to hit the sell button.
Of course, there are also instances where a stock of a great company just gets ahead of itself. In that scenario, taking profits makes sense, as even the best company isn’t a great investment if the valuation is at a high point. Indeed, taking the win and taking all (or some) profits off the table could be the shrewd move for a disciplined investor, even one with the intent to hang on for years at a time.
In this piece, we’ll look at two Canadian stocks that I’d be comfortable hanging onto for the next seven years, if not longer, given the durable competitive advantages that I think are only made better by the rise of AI.
Restaurant Brands International
Restaurant Brands International (TSX:QSR) is quietly having a great year, now up around 14% year to date. With a decent 3.5% dividend yield and a multiple that still makes sense to step in as a buyer (24 times trailing price-to-earnings (P/E)), I wouldn’t sleep on the fast-food icon behind Tim Hortons, Burger King, Popeye’s Louisiana Kitchen, and Firehouse Subs.
It has the tasty food brands and, more importantly, a management team that isn’t afraid to mix things up in an effort to increase the quality while keeping the price in a fair spot to win over the value-conscious consumer. In my view, QSR’s secret sauce is finally working, and I think it could result in several big dividend hikes in the next seven years. The narrative is also so resilient that not even AI’s disruptive impact could weigh on the firm. If anything, AI is a technology that could drive sales and margins.
CN Rail
CN Rail (TSX:CNR) is in the old-fashioned rail business, which I don’t think will change all that much in the next seven years. Of course, things could change for the better with more fuel-efficient locomotives and technologies to improve upon scheduling or even driving.
The future of the railways looks bright, and for CN Rail, there’s no shortage of margin-expansion opportunities in the tech-driven era. The big story, I think, is how the operating ratio can be made better at the hands of AI, which can help minimize downtimes as well as cash and time spent. With a decent 25% gain year to date and a nice 2.1% dividend yield, I think it’s time to board again!
