I wrote about an appealing couple of TSX stocks three weeks ago. Back then, the world was battling an epidemic. It’s since spilled over into a pandemic. A lot can change in the stock markets in three weeks. And that was before the coronavirus crash. So, let’s check back in with those three exemplary Canadian stocks and see why they’re even more of a buy amid the coronavirus crash.
How to play the coronavirus sell-off
Jim Cramer had some sound words of advice this week: “We should buy quality recession-proof stocks because that’s what works when the economy’s on hiatus.” It’s good advice, especially for Canadians. After all, at one point, our main stock market saw five-day losses of 17.6%. The coronavirus crash has wiped 33% off of the TSX if you look at the four-week average.
However, the boldest contrarians may still want to place a side bet on an oil rally in late 2020. Yes, it seems unlikely. But if oil rallied at the end of the year, the upside off those blitzed oil and gas stocks would be tremendous. Oil is trading at four-year lows. That may deepen further as social distancing and travel bans eat into demand.
That’s why it’s a stock-picker’s market right now. Investors need to be discerning and identify which stocks can cope with a downturn. TSX shareholders also need to see which ones fall by the wayside. That doesn’t mean sell everything. It also doesn’t mean back up the truck and buy stocks as if they’re toilet paper and tinned beans. There are better ways to play the coronavirus sell-off.
These two stocks are beating the coronavirus crash
So, how did last month’s picks of Fortis and Manulife Financial fare this week? Let’s check in with them.
Fortis is a buy for its stolid, no-nonsense performance and a 4% dividend yield. Utilities are a classic defensive play, and Fortis is one of the best names in the country. Its history of payments is outstanding. The stock certainly proved true to its low 36-month beta of 0.17 this week, positive by a few points. This stock has long been talked up for its defensive qualities, but the coronavirus crash has really seen Fortis shine.
Manulife bounced Thursday, as investors saw some light at the end of the tunnel. Packages designed to stimulate the economy had investors buying as the week drew to a close. There’s also the fact that Manulife was overall down 15% this week. This is a great value opportunity in a high-quality name. That dividend yield, up at an astounding 8.5%, is also one to lock down.
The bottom line
It’s easy for investors to look at the coronavirus crash and get overwhelmed. But this stock market crash is different. Everyone is in it together. The hardest-hit sectors will get propped up, such as oil and gas companies and the airlines. In the meantime, both sectors abound in bargains. Utilities stocks, like Fortis, are also a great play right now and are one of the most stable sectors out there.
