The Motley Fool

Atomic Job Losses in 2020: How Will The TSX Stock Market Recover?

As the COVID-19 pandemic spreads and wreaks havoc across the world, global markets are tumbling. Canada’s unemployment rates are soaring with around 500,000 jobless claims being filed just this past week. It shows that the Canadian economy is in a deep rut, and entire sectors are shutting down due to the coronavirus.

Canada seems like it is heading towards what surely could possibly be the worst recession in recent history. It might be worrying investors about how they can protect their capital and whether the market will recover.

I am going to take a deeper look into the situation and discuss Fortis (TSX:FTS)(NYSE:FTS) stock. It might be an asset you could consider parking your capital safely through these turbulent times.

Liquidity and aid failing to produce results

Justin Trudeau’s government is facing an unprecedented situation. In light of the developing COVID-19 pandemic situation, the government and Bank of Canada announced measures to keep Canada from slipping into a recession. The government unveiled plans to inject hundreds of billions of dollars into the economy to aid liquidity. The Bank of Canada already announced interest rate cuts and further rate cuts might be on the way.

It is likely that we might see an announcement for the airline and energy sector companies being bailed out in the coming days. The tourism industry is taking a hit because of the necessity of social distancing. The energy sector had already been suffering due to low crude oil prices, as Russia and Saudi Arabia, along with other OPEC+ producers, fell out of favour with each other.

As the $82 billion in direct aid by the Canadian government and record-low oil prices continue to devastate the economy, further actions might be critical in supporting the economy.

Recovering sector

Fortis is a significant operator in Canada’s utility sector. The stock was trading for around $58 early in March. The broader market pullback hit Fortis; the stock traded as low as $42.20 on March 23, 2020. At writing, the stock is back on an upward trend, as it trades for $51.55 per share.

It seems like the sell-off for Fortis was overdone, and the stock is back on a path to recovery. The company owns over $50 billion in utility assets across the United States, Canada, and the Caribbean. Its operations include producing electricity, electric transmission, and the distribution of natural gas. These are all businesses known to weather economic recessions better than others.

The demand for Fortis’s commercial clients might drop due to the massive unemployment rates, but its residential business can likely proliferate. Millions of people are working from home. The demand for utilities never diminishes, despite worsening economic circumstances. The company has a chance to grow revenue during the crisis where other businesses are dwindling.

Foolish takeaway

The S&P/TSX Composite Index rose 17,02% from March 23, 2020, to March 25, 2020. It seems that the TSX is showing signs of life. The Fortis stock rose 22.16% in the same period. The stock could be doing better than the broader market.

The Fortis board raised its dividends for the past 46 years, and there is no reason why it might break its dividend-growth streak this year. I think a stock like Fortis might be an excellent place to park your capital during the volatility that the coronavirus crisis is creating.

Just Released! 5 Stocks Under $49 (FREE REPORT)

Motley Fool Canada's market-beating team has just released a brand-new FREE report revealing 5 "dirt cheap" stocks that you can buy today for under $49 a share.
Our team thinks these 5 stocks are critically undervalued, but more importantly, could potentially make Canadian investors who act quickly a fortune.
Don't miss out! Simply click the link below to grab your free copy and discover all 5 of these stocks now.

Claim your FREE 5-stock report now!

Fool contributor Adam Othman has no position in any of the stocks mentioned.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss an important event.

Iain Butler and the Stock Advisor Canada team only publish their new “buy alerts” twice a month, and only to an exclusively small group.

This is your chance to get in early on what could prove to be very special investment advice.

Enter your email address below to get started now, and join the other thousands of Canadians who have already signed up for their chance to get the market-beating advice from Stock Advisor Canada.

I consent to receiving information from The Motley Fool via email, direct mail, and occasional special offer phone calls. I understand I can unsubscribe from these updates at any time. Please read the Privacy Statement and Terms of Service for more information.