With more good news on the vaccine front, the end of this horrific pandemic is starting to feel closer. While some pundits would argue it’s unlikely that the pandemic will end this year, I do think early 2022 could see safe and effective vaccines finally conquer the insidious coronavirus.
Johnson & Johnson‘s new vaccine was approved in the U.S., and Pfizer‘s third “booster” dose could combat the numerous variants of concern. As the vaccine rollout continues, investors would be wise to bet on the reopening plays and cyclicals ahead of the pack before such firms have a chance to clock in epic recovery numbers.
If you’re waiting for a post-pandemic quarter before considering initiating a position in some reopening plays, you’ll likely have to pay a much higher price of admission. There remain plenty of bargains on the TSX Index that could surge once we’re propelled into the post-COVID economy. It’s these such names that I’d look to scoop up while most other investors would rather chase “sexy” plays like Bitcoin, EV makers, SPACs, Initial Public Offerings (IPOs), meme stocks, and all the sort.
Deep value hiding in plain sight?
To find the best reopening stocks on the TSX, you don’t have to look far, as I believe the best bargains are hiding in plain sight. Without further ado, consider Restaurant Brands International (TSX:QSR)(NYSE:QSR) and Alimentation Couche-Tard (TSX:ATD.B), two deep-value reopening stocks that could have room to run over the next 18 months as we’re propelled out of the pandemic-plagued environment and into one that some like to describe as “the roaring ’20s.”
Restaurant Brands International
Restaurant Brands International is the fast-food juggernaut behind such chains as Tim Hortons, Popeyes Louisiana Kitchen, and Burger King, the latter of which was recently rebranded with a retro theme.
Now, there’s no denying that Restaurant Brands skated offside in 2020. The company’s delivery, drive-thru, and mobile platforms weren’t up to par versus the likes of some of the more resilient fast-food players on the scene. With a commitment to modernizing drive-thrus across all banners, I think Restaurant Brands has room to run, as it looks to catch up to its bigger brothers on the order-tech front.
Moreover, the post-pandemic environment could be more kind to Restaurant Brands versus many of its peers, many of which have mostly (or fully) recovered from the 2020 coronavirus crash. As dining rooms open (for good this time!) and people get back to the daily routine of grabbing their daily double-doubles, I expect QSR stock could make a run for the $100 mark.
Far too many investors are discounting the power behind the firm’s brands. I think that’s a mistake and would encourage contrarians to get into the stock before it’s done serving its time in the penalty box.
Alimentation Couche-Tard
Couche-Tard was an incredibly resilient retailer through the worst of the pandemic. Yet, the stock has been under pressure, and that’s thanks to the firm’s recent failed pursuit of French grocer giant Carrefour. Some investors likely thought the intent to pivot into grocery stores was a move outside of its circle of competence, but I actually liked the plan.
I boil down the recent dip in the stock to a communication fumble by management. The shocking announcement of Couche’s pursuit of Carrefour, I believe, was totally unnecessary. The firm should have better-communicated its grocery pivot and how it fits into the long-term story, rather than shocking and awing, with an announcement that amounted to nothing other than a nasty sell-off in Couche stock.
If it makes sense for an e-commerce king like Amazon.com to get into the grocery business, it makes sense for a c-store giant like Couche to do so as well. I think contrarians would be wise to buy the dip ahead of an economic rebound that could see fuel sales bounce back in a big way.
