COVID-19 cases are spiking in many areas across North America and it’s very possible for there to be another wave of lockdowns and shutdowns in the coming months. One way investors can prepare for that is by investing in companies that can do well even if people are stuck in their homes.
The two companies listed below are a couple of the more resilient buys on the TSX today because they can adapt to that scenario very well and their stocks could become hot buys if people are ordered to stay at home.
BlackBerry
BlackBerry Ltd (TSX: BB)(NYSE: BB) is a great example of a company that’s likely to continue growing whether people are indoors or not. And it may even do better if there’s more businesses that are operating remotely. With a greater need to protect company assets and prevent cybersecurity breaches when people are working from their homes, the need for BlackBerry’s services will only grow, including its AI-based Cylance platform that can help detect threats before it’s too late.
The technology allows employees to stay connected using a variety of devices and apps while remaining safe and protecting information. However, despite the potential for BlackBerry to benefit from a rise in remote work, the stock hasn’t got much love this year, falling 24% so far in 2020.
It was last September that shares of BlackBerry were last up over $10. The stock would go on to fall over a cliff that it’s yet to recover from after releasing a disappointing earnings result.
It’s still a long road ahead for BlackBerry but the good news for investors is that outside of the market crash that happened earlier this year, the stock’s generally found strong support at $6 or more. As long as the company doesn’t have another disastrous quarter next month, the worst may finally be over for the stock.
Cogeco
Cogeco Communications (TSX: CCA) has been a more stable investment this year than BlackBerry, declining by just 9% so far in 2020. The Montreal-based telecommunications and media company is another type of business that could do well with people staying at home and using more of its Internet services and consuming its content. In its third-quarter results, up until the end of May, sales of $605.8 million were up a modest 3.1% year over year.
The company remains confident that it’ll be able to maintain low-single digit percentage growth for the full year for sales and similar growth in its adjusted EBITDA. Although that’s modest growth, that’s still much better than many other businesses that are generating just a fraction of the revenue they were a year ago.
And Cogeco’s comfortable enough with its current financial position that it’s going to continue paying a dividend of $0.58 which yields 2.3% annually. The big question for investors is whether, like last year, Cogeco will raise its dividend next quarter. A year ago, the company hiked its payouts by more than 10%, previously paying $0.525 per quarter.
However, with or without the hike, this is a solid stock to hang on to right now, one that can continue to do well as people are staying indoors.
