Federal tax-conscious Canadian investors should buy stock in companies that are profiting during the COVID-19 crisis. Owning these stocks will provide the highest risk-adjusted returns during the market crash in 2020. Investing in retail and travel stocks is still too risky until the world has adequate COVID-19 treatment options.
Similar to many stocks globally, the price of SNC-Lavalin (TSX:SNC) stock dropped from $29.77 at the start of the year to $22.78 as of Friday, April 24. Overall, the price of SNC-Lavalin stock is $6.99 less per share than where it was at the start of January before the market downturn. Nevertheless, after losing 23.5% of its value year to date, the stock is probably headed for a price increase the rest of the year.
Promising new joint healthcare venture
On Friday, SNC-Lavalin announced that it is engaged in a joint venture to deliver up to 10, 100-bed Mobile Health Units for the nation’s COVID-19 response. The business arrangement should bring in reliable income for investors after the market crash and help the company cleanse its reputation after the legal battle over the company’s 30-year history of corruption.
Ian L. Edwards, president and CEO, SNC-Lavalin commented in a press release, “We are honoured to be able to assist the federal government in this endeavour … to help ensure the health and safety of Canadians during this critical and unprecedented time.”
Still, even the company’s involvement in aiding the global health crisis in Canada may not be enough to salvage trust among Canadians in the corporation. Some Canadians smell something fishy in the new business deals between SNC-Lavalin and the Canadian government.
What better time than a pandemic for the Trudeau Liberals to start rolling out contracts to their good friends at SNC-Lavalin? #cdnpoli #lavscam https://t.co/rXHrXnoWR1
— J Gillis (@notimeforyou80) April 26, 2020
Didn’t take long for @justintrudeau’s friends at SNC-Lavalin to get a slice of the pie. https://t.co/QBnxMJvvcm
— 🇨🇦 tbdawn 🇨🇦 (@tbdawn) April 26, 2020
Layoffs, pay cuts, except for top execs
Even worse for appearances is the $2.6 million in executive bonus pay before the company announced layoffs and reductions in paychecks for the majority of the workforce.
SNC-Lavalin execs get $2.6 million in bonuses while cutting employee salaries, laying off workers – True North Trudeau’s Canada! https://t.co/vBV3VTtMez
— John☘️ (@clerysboy) April 25, 2020
According to the Daily Commercial News, SNC-Lavalin’s executive leadership and board members agreed to a potential 20% reduction in compensation for the second quarter. This decision is unlikely to impress many Canadians interested in investing in stocks after the market’s historic plunge.
Understandably, many tax-conscious investors may choose to buy stock in companies that match their values instead of politically powerful players in the stock market.
Don’t miss the bull after that market crash
Regardless of your specific investment choices now that the market crash has reached its bottom, remain practical and fearless. There is no use in worrying about short-term fluctuations in stock prices if you are a long-term investor. You will lose less in this bear market than you will gain in the bull market.
Savvy investors know when to buy stocks at a discount relative to their future value. In one year, the returns in your retirement account will be worth the wait. Remember to buy when everyone else is selling and sell when everyone else is buying. Like Warren Buffett says, “Be fearful when others are greedy and greedy when others are fearful.”
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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 Debra Ray has no position in any of the stocks mentioned.