Sadly, there’s no telling when this horrific pandemic will end. Until there’s an advent of an effective coronavirus vaccine, we could be stuck in this “new normal” state for the long haul.
Although health experts are optimistic about a safe and working vaccine landing at some point within the next year, I’d argue that it’s far better to position your portfolio like Warren Buffett, by being prepared for the worst as you hope for the best than risking your shirt by positioning your portfolio with the overly-optimistic underlying assumption that this pandemic will end in early 2021.
This piece will have a look at three Canadian stocks that could have room to run as the economy heals from and looks to kick the insidious coronavirus. The following names may have significant upside potential in a post-pandemic environment, but they don’t depend on the elimination of COVID-19 for their survival. In fact, they’re more than capable of weathering further COVID-induced waves in a bear-case scenario.
Without further ado, let’s have a brief look into each name:
Restaurant Brands International
Restaurant Brands International (TSX:QSR)(NYSE:QSR) has felt the pressure of the COVID-19 impact, as sales have been slumping amid dining room closures and social-distancing practices. With a far less robust mobile, delivery, and drive-thru infrastructure in place relative to the likes of a McDonald’s, Restaurant Brands has found it difficult to hold its own relative to the more resilient leaders in the fast-food scene.
While mobile and delivery hasn’t been best in class, the company has made efforts to improve upon its shortcomings in such areas. Sure, it would have been nice if Restaurant Brands’ management made the initiatives before the coronavirus crisis decimated the restaurant industry.
As we move out of this “new normal,” though, it’s likely that the company’s improved mobile and delivery strength will remain. Once the pandemic ends, there will be less competition in the restaurant scene and a potentially severe recession that’ll fuel the demand for low-cost food items. In such a depressing environment, Restaurant Brands will be poised to soar to new heights.
Even if the pandemic drags on for longer than most are expecting, the firm has ample liquidity and the ability to ride out the rough waters for years at a time.
Brookfield Infrastructure Partners
Brookfield Infrastructure Partners (TSX:BIP.UN)(NYSE:BIP) is my favourite firm under the Brookfield umbrella. The company owns, acquires, and manages vital infrastructure assets around the world that are essential for the proper functioning of healthy economies.
Infrastructure investments are an alternative asset class that tends to produce solid returns while granting investors a lower correlation to the broader equity markets. The firm’s long-life assets produce a good amount of resilient cash flows. These cash flows are protected by a sizeable moat and are subject to lower degrees of volatility, even during economic crises like the one we’re facing right now.
Today, the company has ample financial flexibility to take advantage of acquisition opportunities as they come along. The company has a knack for producing real long-term value for shareholders, and as management ramps up on the M&A front again, the stock could soar above and beyond its pre-pandemic highs.
For now, the COVID-19 threatens to delay construction projects further. But compared to most other businesses, BIP is rolling with the punches rather well, and that’s thanks to the resilient nature of the infrastructure business and the incredible stewards running the show who know how to create value via M&A like few others in the space.
