There are two big things happening at the moment: vaccine development and the reopening. The fact that both of these things are happening at the same time, though, is causing some frothiness in the markets. The pandemic is still pushing certain tech names higher, while reopening efforts are seeing some improvement in beaten-up sectors.
The problem is that this situation is driving momentum in several different directions at once. This is untenable. Indeed, tech investors got a taste of this volatility this week, with the NASDAQ getting a thump on the nose. And while a vaccine rollout will bring headaches of its own, an end to the pandemic is all but inevitable.
Bet on a stock with “comeback charisma”
If you follow trends in internet searches, you may have noticed that some of the busiest topics relate to sports. But how should investors tap this national interest in sports teams? Look no further than Rogers Communications (TSX: RCI.B)(NYSE: RCI). This is the number one stock on the TSX to buy for sports access — not only to sports media, but to the teams themselves.
Rogers is also a stock to watch because of its bid to buy the Canadian assets of Cogeco. If the deal goes ahead, this would put Rogers ahead of the game in Canadian telcos. The move would rearrange the entire sector, with competitors such as Telus and BCE potentially scrabbling to maintain market share.
The takeover bid is already causing a few waves when it comes to share prices in TSX telcos. Investors might expect this volatility to increase if the bid goes ahead. Bullish on a breakthrough? While Cogeco is resisting the move, the smart money is on a possible deal. That makes now a good time to buy shares in Rogers.
A top indicator stock to watch for recovery
Moderna (NASDAQ: MRNA) managed to cause a tech stock selloff earlier in the year. At the time, it was attributed to investors getting spooked about high valuations. Well, yes — high valuations are generally why any investor chooses to sell any stock that doesn’t pay a dividend. But a deeper reading of the situation suggests that a vaccine is anathema to any business thriving on a quarantined society.
This week saw tech stocks take another bashing. The time around the cause was less clear. However, the consensus is that investors got spooked again. A macro view of the situation shows that the Tesla and Apple stock splits stirred up investors at a time when anxiety was already rife in the markets. Excessive buying quickly led to an excess of selling as the contagion spread.
Going back to Moderna. Since this name is a key part of the vaccine production and rollout process, its performance will be an early indicator of market froth. Investors might expect to see positive vaccine headlines presaging further tech stock selloffs. Moderna serves as a particularly accurate indicator here, given its billion-dollar deal to supply the U.S. government with a COVID-19 vaccine candidate.
