COVID-19: 3 Beaten-Down TSX Stocks That Are Rallying Now!

These three TSX stocks are rallying from March lows. They have value, income, and growth in their own right. Robin Brown investigates.

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The COVID-19 crisis crash has beaten-up a number of top TSX stocks, whether fair or not. Today, I want to take a look at three TSX stocks that are trading cheap, but are demonstrating a strong rally from their March lows. You don’t want to miss out!

This TSX real estate stock is starting to turn around

The first TSX stock is Brookfield Property Partners (TSX:BPY.UN)(NASDAQ:BPY). This stock was absolutely crushed in March (it lost 60% of its value) when COVID-19 restrictions forced the closure of malls and offices across the world.

Investors were fearful around tenants’ ability to pay rent, let alone survive the crisis. Certainly, a wave of retail bankruptcies (J. Crew, J.C. Penny, Nieman Marcus) will undoubtedly affect Brookfield’s retail portfolio. Yet, as I have mentioned in a previous article, Brookfield still has considerable upside potential from here.

First, its retail portfolio is includes some of the best-located, best-quality malls in the United States. These will consistently be the top locations for commerce for many years to come.

Second, 55% of its cash flows come from best-in-class office properties (with long-term leases) and a diverse portfolio of multi-family, industrial, and development assets.

Third, although it is up 60% from its lows, it is still trading at a deep discount to book value. BPY is yielding 12% and the distribution is backstopped by a strong balance sheet. I think this TSX stock still has 30% to 50% upside over the short term.

This staple Canadian retailer could have a busy summer

The second TSX stock showing a nice recovery is Canadian Tire (TSX:CTC.A). It is spring time – Canadians are eager to get out of the house, get in the garden, go camping, or head out to the cabin. This environment is perfect for Canadian Tire. In fact, there have been reports of massive line-ups to get into stores across the country.

The stock was down 52% at one point. Yet, now it is showing a strong recovery. Investors were mostly concerned about its subsidiary retailers (Mark’s, Sport Chek, Helly Hansen), which were temporarily closed. These chains are now re-opening and I expect strong second half demand from Canadians loading up on outdoor gear.

In addition, Canadian Tire has been improving its online e-commerce platforms. Its e-commerce platform saw very strong sales growth in the first quarter. I think e-commerce will continue be a strong element of sales growth going forward. Canadian Tire pays a nice 3.6% yield, and I think, as long as there is no COVID-19 relapse, its stock could recover to previous February levels.

This TSX dividend stalwart is growing steadily

The last TSX stock demonstrating strong momentum is Telus (TSX:T)(NYSE:TU). In March, Telus’ stock lost about 30% of its value. Yet, the stock is back up around 23% from its lows. Telus is interesting for a few reasons.

First, being a leading Canadian telecom, its services are absolutely essential, especially during the pandemic. No matter what happens with the economy or the virus, Canadians are using more broadband, Wi-Fi, and data. Telus has been investing heavily in wireline infrastructure to position itself to meet this demand.

Second, Telus has some growth arms in virtual health services and international telecommunication services. While these are small segments, I think over time these could provide substantial avenues for growth.

Third, Telus’ strong infrastructure leverages it to quickly exploit the 5G transition. First player advantage could enable it to capture market share as customers turn to better, faster data.

Telus is an all-around solid, stable TSX stock with a decent 4.75% yield. I think it deserves a space in every Canadian’s portfolio today.

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 Robin Brown owns shares of Brookfield Property Partners. The Motley Fool recommends Brookfield Property Partners LP.

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