Driven by lower avenues to spend and government stimulus, Canadians are sitting on record amounts of cash in 2021. So, when we return to normalcy and spending stabilizes probably in the second half of this year, consumer stocks could see a significant boost. Here are three top TSX stocks to bet on amid the impending recovery.
Restaurant Brands International
One of the biggest winners of the normalcy could be Restaurant Brands International (TSX:QSR)(NYSE:QSR). The stock has largely been trading in a narrow range for the last eight-odd months. But it could soon break above once mobility restrictions ease.
It operates a franchise model with three top-rated brands — Tim Hortons, Burger King, and Popeyes — under its umbrella. Restaurant Brands saw some recovery in the last quarter on the top-line front compared to the deep dent in Q2 2020. Its strong, diversified presence and unique value proposition will likely play a bigger role in its post-pandemic recovery.
Restaurant Brands’s large debt pile could concern investors. Faster recovery could help it lower the burden relatively quicker. Notably, there are more positives for QSR as compared to its challenges in the post-pandemic scenario. Strong growth prospects and a decent yield of 3.5% make Restaurant Brands stock appealing for long-term investors.
Although Shopify (TSX:SHOP)(NYSE:SHOP) sees relatively slower growth in 2021, it remains a solid long-term play for investors. The stock has fallen almost 20% from the top, and I see a limited downside from its current levels.
Shopify is one of the best growth stocks in the world. It has returned almost 5,000% since its IPO in May 2015. Even if the pandemic ends and shoppers return to brick-and-mortar stores, Shopify will likely continue to see decent growth in the long term.
Merchants will continue to spend on setting up an online store to diversify and boost their business activities. Shopify’s large customer base, recurring revenues, and product expansion should drive its customer base growth in 2021.
Shopify’s premium valuation remains a concern. However, after a 20% slide, I think Shopify stock is again an attractive play, given its handsome growth potential. Conservative investors can consider buying in slices.
Canadians’ cash piles will play as an economy stimulator once they are allowed to spend. According to experts, some of the major areas where they will spend is travel and leisure. Thus, Air Canada (TSX:AC) could see enormous demand growth in late 2021 as we gradually return to normalcy.
Many are cynical about the business travel demand recovery in the post-pandemic world. However, a major portion of the lost demand will likely be offset by increased leisure travel. If the long-awaited Transat A.T. acquisition gets completed, Air Canada will gain a significant share of the leisure travel market.
Amid slower vaccinations, air travel demand recovery could get pushed further. However, it will still be significantly higher in the second half of 2021 against the same period last year. Thus, Air Canada will likely see a revenue growth that will take its stock remarkably higher.
Before you consider Air Canada, you may want to hear this.
Motley Fool Canadian Chief Investment Advisor, Iain Butler, and his Stock Advisor Canada team just revealed what they believe are the 10 best stocks for investors to buy right now... and Air Canada wasn't one of them.
The online investing service they've run since 2013, Motley Fool Stock Advisor Canada, has beaten the stock market by over 3X. And right now, they think there are 10 stocks that are better buys.
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. Tom Gardner owns shares of Shopify. The Motley Fool owns shares of and recommends Shopify and Shopify. The Motley Fool recommends RESTAURANT BRANDS INTERNATIONAL INC.