Even though markets have been rallying for the last few months, many top TSX stocks are still far from their all-time highs. This year’s expected superior earnings growth against 2020 should drive those Canadian names to record levels. Here are the top three TSX stocks that could soar higher amid the post-pandemic recovery.
Restaurant Brands International
Restaurant Brands International (TSX:QSR)(NYSE:QSR) stock has been trading in a narrow range since last June. Despite far-reaching vaccinations, uncertainty regarding full-scale re-openings has delayed its recovery. However, this won’t be the case probably in the second half of 2021. Little or no restrictions will help restaurants operate at full capacity, ultimately boosting their top line.
QSR operates a franchise model with three famous brands — Tim Hortons, Burger King, and Popeyes. The company today announced its plans to expand Popeyes to hundreds of locations in Mexico. It currently operates at 3,400 locations across the globe but has a limited presence in Mexico. The expansion suggests the company’s aggressive approach to betting on a post-pandemic recovery.
Restaurant Brands’ unmatchable value proposition, scale, and large presence across the globe stand tall among peers. Improving earnings growth later in 2021 and decent dividends make QSR stock attractive for long-term investors.
Shares of Canada’s integrated energy titan Suncor Energy (TSX:SU)(NYSE:SU) have been weak since last week. A notable drop in crude oil weighed on energy stocks. However, it has seen a massive recovery, gaining more than 80% in the last six months. The stock is still way lower than its pre-pandemic levels and can see handsome gains later this year.
Suncor Energy’s scale and integrated operations given it a competitive edge over peers. It is well placed to benefit from the improving energy demand and higher crude oil prices.
Crude oil prices have notably improved in the last few months as compared to last year. Many brokerage houses have given a US $100 per barrel target for crude oil, which could drive SU stock higher. Its stable dividends and attractive valuation should fuel a relatively faster recovery post-pandemic.
Last year’s laggard stock Air Canada (TSX:AC) is topping the charts this year with its epic run. It is up almost 80% since November last year. Investors cheered AC stock mainly on the vaccine launch and its improved recovery prospects.
Air Canada stock has seen a terrific move from February on the government bailout hopes. A good-sized bailout package will likely make the flag carrier stronger to weather the crisis. It has been spending lower cash compared to peers and has a decent balance sheet.
Additionally, AC stock could soar higher if the Canadian government relaxes its border restrictions and airlines operates with higher capacity. Air travel demand might take longer to recover fully. But investors can expect a decent topline growth from Air Canada in the second half of 2021.
Investors should note that AC stock seems to have rallied a bit too far based on the bailout hopes. If it disappoints in size, the stock, which looks overvalued, could see a pullback in the short term. Investors who want to bet on Air Canada can consider buying in multiple tranches.
Before you consider Air Canada, you may want to hear this.
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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. The Motley Fool recommends RESTAURANT BRANDS INTERNATIONAL INC.