The COVID-19 pandemic has wreaked havoc on various sectors of the global economy. Many industries collapsed during the lockdown and are still scrambling to cope with the “new normal.” With a second wave of COVID-19 cases that could realistically dwarf the first, many firms won’t make it to the other end of this crisis alive. This piece will have a look at three firms that will, and once they do, investors who stood by them during their darkest moments will be the ones that will stand to be profoundly enriched once the world heals from the insidious virus.
From least risky to riskiest, consider riding the following stocks into the post-COVID world while they’re still depressed.
Restaurant Brands International
Restaurant Brands International (TSX:QSR)(NYSE:QSR) didn’t deserve to implode the way it did back in February and March. While QSR shares have bounced back out of their March depths, the name remains a country mile away from its all-time highs.
Many fast-food firms such as McDonald’s have already begun to move above their pre-pandemic heights. Although QSR’s mobile and delivery capabilities aren’t at the level of McDonald’s (at least not yet), I think that QSR will rise out of this pandemic in a position of profound strength.
QSR has made progress with mobile and delivery capabilities amid the pandemic. And with a less-crowded restaurant scene, pent-up demand for eating out, and a growing appetite for value offerings amid this recessionary environment, I think QSR stock could rocket to $100 a lot quicker than most think and would encourage investors to buy shares while they’re under $80.
TC Energy
The energy sector has been hit so hard that midstream energy kingpin TC Energy (TSX:TRP)(NYSE:TRP) has been feeling the shock waves of its clients in the space. If fossil fuels continue treading water over the long run, then sure, TC Energy faces an uphill road to recovery. Given TC Energy is a best-in-breed pipeline play with a diversified portfolio of assets and a more regulated mix of cash flow streams, I view TC Energy as more of a utility and less of a traditional energy stock than its midstream peers.
With shares down just under 25%, TC Energy is my top pipeline pick. Management has done a remarkable job of weathering the post-2014 fall in energy prices, and I think it’ll come roaring out of this 2020 collapse in a similar manner. The stock sports a 5.6% dividend yield that’s worthy of locking in today before the stock has a chance to bounce back post-COVID.
Air Canada
Finally, we have the riskiest stock in this piece. Air Canada (TSX:AC) may have uncapped downside risk, but I still think young investors with strong stomachs should be buyers of shares here. Health experts think we’ll have a vaccine ready to be distributed by the third quarter of 2021. Air Canada has more than enough liquidity to weather the storm until then.
Air Canada has been cutting capacity, reducing cash burn, and raising as much liquidity as it can to improve its chances of surviving the crisis. As the world awaits a safe and effective vaccine, I think investors shouldn’t rule out non-vaccine advancements, including rapid-testing devices that could allow the airlines to get bums in seats without running the risk of having passengers spread COVID-19.
Air Canada just ordered 25,000 rapid COVID-19 test kits and could be a major source of relief for the turbulent airline until the vaccine arrives.
