Most stocks across all sectors have taken dramatic somersaults in the first quarter of 2020. You can also expect the market to stay in the crash zone for an extended period. But are there still stocks providing excellent value today, over the short term, and in the long term amid the coronavirus outbreak?
For investors with appetites to invest in a mid-cap, Dollarama (TSX:DOL) and Telus (TSX:T)(NYSE:TU) should be among the top picks. While the shares of the operator of a chain of dollar stores (-8.1%) and the telecom giant (-10.3%) are losing year to date, both are doing better than the overall market (-17.0%).
Dollarama admits that the current situation is unprecedented in our lifetime. At the same time, management takes pride in the appeal of its value proposition to investors. Canada’s leading value retailer has a unique business model and is in a strong position to endure a one-of-a-kind market downturn.
The fiscal 2020 results are proof that the business of Dollarama is stable as ever. Its top and bottom lines grew by 6.7% and 2.8%, respectively. Despite lower product margins and one-time logistics cost, gross margin came out to be 43.6% of total sales.
However, due to limited visibility on future performance, management deems it proper to suspend guidance for fiscal 2021. According to Dollarama’s CEO Neil Rossy, the company can’t predict how the shopping patterns will evolve.
Nevertheless, there has been a surge in current-quarter sales, as customers are stockpiling everyday essentials. The only challenge is to ensure that all stores are well stocked for the consuming public.
Telus is cementing its foothold in wireless networks amid the pandemic. The mobile networks of this $28.3 billion telecom giant are critical in the flow of information during these trying times. Canadian families also rely on Telus to stay connected with loved ones.
The stay-at-home and social-distancing directives are increasing the use of mobile telecom. Likewise, there’s a sharp jump in mobile data consumption. So far in this crisis, the experience of customers is seamless and uninterrupted.
Telus’s $181 billion investment in network infrastructure, spectrum, and operations since 2000 is in full throttle. There is enhanced coverage, faster speed, and reliable connection. Over the next three years, Telus will be spending $40 billion in critical technology components.
The third-largest telecom operator is preparing for the coming of the new age of hyper-connectedness. Telus expects enhanced innovation with the rollout of 5G networks. It will also be active in driving digital development across industries.
Telus is also connected to the health sector by helping to prioritize patient care during the pandemic. Telus Health’s virtual video functionality enables doctors to conduct virtual visits and update medical records electronically. Aside from ranking first in wireless speed, the company is the leading provider of digital health technology solutions.
Telus is a Dividend Aristocrat, and the current yield of 5.23% is the highest offer of this telco stock so far.
The best thing about Dollarama and Telus is, whether the companies are in a market crash zone or not, both offer excellent value.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor Christopher Liew has no position in any of the stocks mentioned.