COVID-19 turned life upside down in March 2020 and ran roughshod over the stock market with chilling effects. The impact on Canada was brutal because oil prices were plunging too. While the TSX rebounded in the interim, many fear, that another crash is imminent.
Money is flowing that investors are taking advantage of depressed prices and buying stocks faster than ever before. Market crashes are buying opportunities, but if billionaire investors and investment gurus are staying on the sidelines, it gives a negative impression.
Fear factors
This year has been eventful with COVID-19 instilling the most terror. However, other fear factors are contributing to elevated volatility. Stimulus packages are weighing heavily on economies and could stall recovery. Corporate earnings are likely to be dismal in the ensuing quarters. The U.S. presidential election is a developing political storm that could shake the markets.
Given the above ingredients, the brew is not looking good. A repeat of the all-out market crash in March 2020 looms large. The difficulty lies in looking for investments with a reasonable margin of safety. Many of them are available at low prices and could deliver many years of gains to would-be investors.
Beating the odds
Market analysts anticipate TC Energy (TSX:TRP)(NYSE:TRP) to deliver an above-average return relative to the general market in the next 12 months. Its current price is $61.23 at writing, and the forecast is a 35.5% climb to $83. The energy stock is also paying a 5.39% dividend, making it a doubly exciting investment option.
TC Energy is a $57.55 billion North American pipeline giant. Although it’s a premier energy infrastructure company and not an oil producer, the shares are down 8.92% year-to-date due to the energy sector’s sensitivity these days. Pipelines, however, play a critical role in the industry.
The company engages in vital services: natural gas pipelines in Canada, the U.S. and Mexico, liquid pipelines, and power & storage. The natural gas business segment consists of a vast 57,096 miles of pipeline network, while the 3,030 miles oil pipeline system in the liquid section is 3,030 miles long. TC’s 11 electricity generation facilities comprise the power & storage business segment.
In Q2 2020 (quarter ended June 30, 2020), the company reported a $1.3 billion net income attributable to common shares, which is 15.4% higher versus Q2 2019. Russ Girling, President and CEO of TC Energy, cites the diversified portfolio of essential energy infrastructure as the reason for the better-than-expected performance in the pandemic.
Waiting game
The rally of the TSX amid a declining economy is encouraging to investors, but it’s not your typical bull market run. TC Energy and a host of other companies can thrive and survive regardless of the market behaviour. However, the pressure is all around such that the market can go haywire anytime.
If you can’t take the heat, sit on your cash in the meantime and be like the billionaires playing the waiting game. It should be the most clever investment strategy for now. But be ready to pounce on the market if ever another crash happens. Stock prices will drop and open buying opportunities again.
