Vaccine Rollout: 2 Stocks That Could Win Big

Canada’s vaccine rollout could gather pace soon which is great for stocks like Recipe Unlimited (TSX:RECP).

| More on:
pharma, vaccine, coronavirus, COVID

Image source: Getty Images

Canada’s vaccine rollout is finally gaining momentum. Nearly seven million doses have already been administered. That means 3.5 million people, or 10% of the population, has been inoculated so far. 

Over the next few months, I expect the pace of vaccinations to accelerate. The United States has nearly completed its vaccination drive. That means they could have spare supply soon, much of which could be sent across the border. Canada already has contracts for tens of millions of doses from all producers. 

The vaccine rollout could create a boom in some parts of the economy. Gyms, restaurants, offices, and spas could finally reopen by the end of the summer. In fact, some provinces have already started reopening. With that in mind, here are the top two stocks I’m watching for the recovery trade.   

Vaccine rollout winner 1

Loblaws Companies (TSX:L) has kept all of its grocery stores open throughout the pandemic, which means it shouldn’t expect a jump in foot traffic from the reopening. However, investors shouldn’t overlook the company’s pharmacies under the Shoppers Drug Mart brand. 

Shoppers has been designated as a vaccine rollout hub. That means millions of Canadians could get their doses administered at one of the 1,300 Shoppers locations across the country. This unprecedented spike in foot traffic coupled with the long queues that are likely could push Shoppers’ sales higher.  

Meanwhile, Loblaws is trading at a perfectly reasonable valuation. The stock trades at 20 times earnings per share and offers a juicy 2.14% dividend yield. This robust recovery stock should be on your radar throughout the vaccine rollout. 

Vaccine rollout winner 2

Recipe Unlimited (TSX:RECP) is another overlooked winner of the recovery. The company owns several food and beverage brands that have suffered the most during the previous year’s lockdowns. Now, the company’s 1,221 Canadian and 51 international outlets can reopen. 

Recipe’s brands include Swiss Chalet, Landing Group, Montana’s BBQ & Bar, Elephant & Castle and the Keg, among others. Unlike other food brands, Recipe’s business model relies on dine-in customers willing to pay a premium for the space, service and ambience. As the weather improves, people get vaccinated and pent-up demand gets unleashed, these outlets could see more traffic than ever before. 

Recipe’s stock is trading at 12.6 times forward price-to-earnings ratio. The company is also worth roughly 13.4 times free cash flow. If earnings and cash flow skyrocket over the next few months, the stock could see significant appreciation. 

Bottom line

Canada’s vaccine rollout has been slower than most other countries. However, the pace is about to pick up. The economic reopening and rebound trade should be on every investor’s mind for the next few months. This is a great time to find bargains if you’re a value investor. It’s also a good time to bet on near-term growth. 

My top recovery picks are Loblaws and Recipe Unlimited. 

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 Vishesh Raisinghani has no position in any of the stocks mentioned.

More on Investing

money cash dividends
Dividend Stocks

2 TSX Dividend Stocks Paying Big Income in a Bearish Market

Despite a pullback in the market, there are still plenty of dividend stocks paying big income to buy. Here’s a…

Read more »

Paper airplanes flying on blue sky with form of growing graph

Here’s Why Smart Investors Are Buying Bombardier Stock Hand Over Fist

Bombardier stock jumped 16% in a week amid a bearish market. What caused investors to buy this stock hand over…

Read more »

data analyze research

My 3 Top TSX Portfolio Holdings Going Into April 2023

Are you looking for TSX stocks to add to your portfolio in April 2023? Here are my three top holdings!

Read more »

consider the options
Dividend Stocks

Better Buy for Dividends – Enbridge or BCE Stock?

Given the favourable market conditions, higher dividend yield, and cheaper valuation, I am more bullish on Enbridge.

Read more »

Dividend Stocks

3 of the Best Canadian REITs to Buy While They’re Still Undervalued

These three Canadian REITs have attractive growth potential and are trading undervalued, making them some of the best to buy…

Read more »

Investor wonders if it's safe to buy stocks now
Bank Stocks

Better Bank Buy: Bank of Montreal or Bank of Nova Scotia?

Bank of Montreal and Bank of Nova Scotia trade near 12-month lows. Are these bank stocks oversold?

Read more »

Target. Stand out from the crowd

3 TSX Stocks to Buy in the Current Market Dip

The market dip from the U.S. banking crisis has created an opportunity to buy three fundamentally strong stocks before they…

Read more »

stock market
Metals and Mining Stocks

2 TSX Mining Stocks to Buy as Gold Prices Surge Past $2,000

Bullish on gold? Investing in quality mining and royalty stocks such as Barrick Gold is a solid bet in 2023.

Read more »