The 2020 stock market crash is unlike any other. An epidemic has pushed global economies into a “social-distancing recession.” Fortunately, the stimulus measures by the government are helping the Toronto Stock Exchange (TSX) to charge back. Canada’s main stock index posted back-to-back rally since the crisis began.
On a positive note, buying opportunities are opening up, especially in sectors that are taking the hardest hits. The TSX hasn’t reached the bottom yet, because a fiscal stimulus is in place. Still, a massive sale of stocks is underway. This might be a good time as any to take positions in some of the good names.
Shifting focus
Luxury apparel maker Canada Goose (TSX: GOOS)(NYSE: GOOS) is in the dumps. The shares are down 40.91% year to date. The $3 billion company closed all retail stores in North America and Europe effective March 17, 2020.
Customers are now confined to online shopping. In Greater China, however, stores are open to shoppers. As the global pandemic evolves, Canada Goose will do regular assessments of its retail and manufacturing operations.
In response to the call to help prevent the spread of COVID-19, the company is shifting focus. Its factories are starting to produce medical gear for healthcare workers and patients across the country. The manufactured scrubs and patient gowns will be distributed to hospitals and are local donations at zero cost.
Dani Reiss, Canada Goose president and CEO, is foregoing three months’ salary to use the funds to establish the Canada Goose Employee Support Fund. The current price of $27.90 is a steal considering it was trading at nearly $47 in early January.
Mining pick
In the gold space, Agnico Eagle Mines (TSX: AEM)(NYSE: AEM) could be an interesting choice in these troubled times. This $14.2 billion producer and seller of gold deposits is hurting as well from the market carnage. The price has gone down by 24.87% since the beginning of 2020, while the current dividend yield is 2.3%.
On the plus side, lower energy prices are benefiting mining companies because the firms are big energy users. Drilling and processing costs are lowering while margins are improving. According to Ben Lam, Agnico’s vice-president for Treasury, the company is finding ways to capture the benefits of the oil price crash.
Agnico posted year-over-year revenue growth of 13.7%, or $2.5 billion in 2019. It was a net loss of $326.7 million in 2018, but the company rebounded with a $473.2 million in net income for 2019. Agnico’s cash and cash equivalent position on year-end was $321.9 million.
Because of market conditions, Agnico is taking a conservative stance by lowering its production guidance in 2020. This miner will be producing 1.875 million ounces of gold.
Market rebound
There is hope around the corner, because the $82 billion rescue package is helping the TSX to surge and not crash some more. No one is in a position to call a bottom on the stocks. Instead, a buying spree is on.
Investors should consider stocks like Canada Goose, Agnico Eagle Mines, and other top names. A rally should be forthcoming in the aftermath of the coronavirus.
