Moderna reported on Monday that its coronavirus vaccine is 94.5% effective — a higher efficacy rate than Pfizer’s vaccine and more good news for the market. So with this second vaccine announcement, let’s start thinking about which stocks to buy.
The light at the end of the tunnel is here. Cineplex Inc (TSX:CGX), Air Canada (TSX:AC), and Suncor Energy Inc. (TSX:SU)(NYSE:SU), have massive upside when things turn. So let’s take a closer look at the three stocks to buy as coronavirus vaccines inch closer to reality.
Cineplex stock will soar as populations receive the vaccine
Today, Cineplex stock is a shell of what it used to be. It is down 72% versus pre-pandemic levels, with revenue that has fallen off a cliff. Cineplex has been in survival mode — and its survival efforts are testament to the quality of its management. Costs have been slashed and leasing agreements have been renegotiated.
Even when Cineplex theatres were open this fall with little attendance, they were slightly cash flow positive. And there has been a big focus on segments of Cineplex’s business that are less affected by this crisis. Cineplex Store, digital media and its food delivery service have seen solid increases.
So today, as we stare into the distance and ponder the possibility of the end of the coronavirus, Cineplex looks good. The market agrees. Cineplex stock has doubled since the beginning of October. People are ready to return to the movies. And Cineplex will be there when we can.
The coronavirus vaccine will make Air Canada stock take off
Air Canada stock has already taken off on news of two promising coronavirus vaccines. Air Canada stock has rallied 38% since the end of October. And while Air Canada faces much bigger cash flow problems than Cineplex, this stock has begun to rally.
At the end of the second quarter, Air Canada had $9.1 billion in liquidity. Cash burn in the third quarter was approximately $17 million per day. Air Canada has continued to reduce this cash burn. And while it will take a while for the airliner to ramp back up when the time comes, we can finally see that better times are ahead.
Suncor stock will rally as oil prices rocket higher
With a coronavirus vaccine, we will eventually see the return of travel. Car trips, airplane trips, and everything in between. The bustling of society will pick up and this will send oil prices higher. Today, oil is trading at just under $42.00. All we need for oil prices to make more gains is the expectation of a return of demand for jet fuel, gasoline, etc.
And we are quickly approaching this resetting of expectations. The market is reacting already. While it is never a straight line up, the market is beginning to expect the return of oil demand. Citigroup is forecasting oil to surpass $60 in 2021, sending Suncor stock skyrocketing higher.
The bottom line
The coronavirus vaccine is a game changer. This is an easy one. The difficult part to figure out is which companies will survive until we get this vaccine. In my view, the three stocks listed in this article will survive this crisis and go on to thrive when the vaccine comes.
