As the economy picks up the pace and demand slowly returns, I believe it’s time to invest in stocks that could gain big from the return to normalcy in the post-pandemic world.
Here are three top TSX stocks that could deliver stellar returns, as the economy rebounds and demand returns to normal.
Cineplex
Movie theatre and entertainment venue operator Cineplex (TSX: CGX) barely operated during 2020 and delivered huge losses. However, the vaccine distribution and easing of pandemic-led restrictions have rekindled hopes of a revival, driving its stock higher.
Notably, Cineplex stock gained about 163.4% in the past six months on the hopes of the reopening of its theatres and entertainment venues. With large-scale vaccine distribution and the projected recovery in demand, I expect to see a solid sequential improvement in Cineplex’s revenues and capacity. Meanwhile, the company has been managing its costs well and strengthening liquidity.
Cineplex expects to return to normal operating levels soon, which is likely to support its stock. Meanwhile, its lower costs are expected to support its earnings. Despite the recent run-up, Cineplex stock is still trading at a significant discount and is an attractive long-term bet.
Air Canada
Air Canada (TSX: AC) stock is one of my top recovery plays and is likely to witness a sharp improvement in its financials once the travel restrictions are eased. The stock has gained over 60% in six months on hopes of recovery in air travel demand and vaccine distribution. While it might take two to three years for Air Canada to return to pre-pandemic levels, I expect to see an improvement in its revenues, while its losses are likely to contract in 2021.
Air Canada has managed to bolster its liquidity and drastically reduced costs. Further, its focus on the air cargo business bodes well for future growth and diversifies its revenue stream.
I remain upbeat on Air Canada’s prospects in the long run. The wide availability of the vaccine by the end of 2021, easing travel measures, and recovery in demand is likely to support Air Canada’s financials and, in turn, its stock.
Suncor Energy
Like all energy companies, Suncor Energy (TSX: SU)(NYSE: SU) suffered huge losses during the pandemic, as oil demand plummeted. However, the company recovered some of its losses, and its stock has started showing upside momentum, as both price and demand picked up the pace. Suncor stock has gained about 56% in six months amid rising crude oil prices, and I believe there’s further upside to its stock in 2021 and beyond.
The rise in economic activity is acting as a strong catalyst for Suncor, driving prices and volumes higher.
Meanwhile, its integrated energy assets, solid balance sheet, and mix shift towards high-margin products augur well for future growth. With an improving operating environment, higher average realized prices, and lower cost base, I expect Suncor to regularly repurchase shares and pay dividends. Notably, its stock is still trading at an attractive discount and is a solid long-term pick.
