TSX Stocks: 2 Vaccine Rally Gainers That You Might Want to Avoid in 2021

Here are two TSX stocks that are eagerly waiting for a quicker economic rebound, which will outline their fate next year.

| More on:
Choose a path

Image source: Getty Images

Global stock markets rallied in November on the vaccine news. The euphoria is now put at risk due to the new variant of the coronavirus. Now it seems that the recovery next year could take longer than expected, driven by new restrictions.

Here are two TSX stocks that are eagerly waiting for a quicker economic rebound, which will outline their fate next year.


There seems to be no respite for the theatre chain operator Cineplex (TSX:CGX). The debt-ridden company is facing a flurry of challenges for the last several months. First came the postponement of blockbuster movie releases, and now there are the fresh restrictions during the holiday season amid the second wave of the pandemic.

That’s not all. The company is burning cash at a record pace. Cineplex lost 85% of revenues in the last reported quarter compared to the same period last year. Amid lower revenues, it has decided to raise cash by selling its head office building in Toronto.

The $580 million multiplex operator is struggling to pay back its dues due to a lack of cash. It received interim relief from creditors that allowed pushing back $460 million repayments to Q2 2021.

Cineplex stock has almost doubled since late October, as vaccine news brought back investors’ hopes. However, it might take longer than expected to regain moviegoers’ confidence and achieve respectable top-line growth.

Cineplex’s weaker cash position indicates that it might not be able to bridge the gap and survive till then. The recent stock rally might not sustain in 2021, because of the underlying uncertainties and a deeper dent in its financials.

It is not certain that Cineplex will doom next year. More relief from creditors and faster vaccinations could change the theatre company’s fate. However, as an investor, don’t try to catch a falling knife. The heap of uncertainties around Cineplex might weigh on the stock at least for the next few months.

Aurora Cannabis

With the Biden administration’s expected support for the cannabis industry, top pot grower Aurora Cannabis (TSX:ACB)(NYSE:ACB) stock has rallied around 140% since November. Despite the steep gain, it is still trading 60% lower than its late 2019 levels.

It’s been a crazy year for pot stocks, and Aurora was no exception. Aurora Cannabis is struggling on several fronts. Its profitability seems at least a few years away, with its slowing revenue growth and rising competition.

Besides, it has closed five production facilities recently amid the tapering demand. It has worked hard on the cost-cutting measures and lowered the cash burn. However, it recently halted construction at two of its biggest projects to meet the liquidity needs.

Aurora Cannabis stock could continue to trade extremely volatile next year as well. The stock’s valuation also doesn’t paint a rosy picture that suggests a robust comeback. A prolonging financial performance could be the only factor that might fuel the Aurora Cannabis stock in 2021.  However, that doesn’t seem to be happening anytime soon. Conservative investors had better avoid the stock.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Vineet Kulkarni has no position in any of the stocks mentioned.

More on Dividend Stocks

money cash dividends
Dividend Stocks

TFSA Passive Income: Invest $30,000 to Earn $500,000 + $7,800 in Tax-Free Dividends

Make the power of compounding work for you and turn a $30,000 investment into $500,000 in the next 20 years.

Read more »

Wireless technology
Dividend Stocks

5 Things to Know About Telus (TSX:T) Stock

Telus offers a diversified business model and steady dividend growth. Is it a buy in this market?

Read more »

Dollar symbol and Canadian flag on keyboard
Dividend Stocks

These 2 Canadian Dividend Stocks Are a Retiree’s Best Friend

Retirees can expect these companies to pay uninterrupted dividends and grow their payouts in the coming years.

Read more »

A stock price graph showing declines
Dividend Stocks

Here’s Why I’m Confident About Investing Through the Down Market

There is no bear market in history that has not been followed by a bull cycle. Rather than fret over…

Read more »

Business man on stock market financial trade indicator background.
Dividend Stocks

2 Undervalued Canadian Stocks Worth a Buy Right Now

Two Canadian stocks are strong buys right now because their current share prices are way below their true values.

Read more »

falling red arrow and lifting
Dividend Stocks

Why Bank of Nova Scotia (TSX:BNS) Stock Fell to Two-Year Lows Last Week

Should you buy BNS stock at such depressed levels?

Read more »

Caution, careful
Dividend Stocks

This Incredibly Common Mistake Can Come Back to Bite Dividend Investors

Are you thinking of buying dividend stocks? Keep these characteristics in mind!

Read more »

Man data analyze
Dividend Stocks

3 TSX Stocks to Buy Today and Hold Forever

The market pullback is giving investors a chance to buy great Canadian dividend stocks at cheap prices.

Read more »