What are your re-opening plays? TSX stocks at large have gained 75% since last March. They might make new highs probably next year when things normalize post-pandemic. Here are my top three picks for the post-pandemic world.
BRP
The powersports vehicle maker BRP (TSX: DOO)(NASDAQ:DOOO) reported yet another strong quarterly earnings on June 3. Despite a robust set of numbers and upbeat guidance, the stock fell almost 5% after its release.
Notably, DOO stock has now lost approximately 20% from its recent highs, indicating an excellent opportunity for long-term investors.
For the three months ended April 30, 2021, the company’s revenues soared by 47% year over year. It reported a net income of $244 million for the quarter against a loss of $226 million in the same quarter last year.
It continued to see robust retail demand growth during the quarter. BRP management increased its guidance, expecting a year-over-year earnings growth of 58% for fiscal 2022.
BRP’s strong presence worldwide and robust product portfolio like Sea-Doo and Ski-Doo make it an attractive bet for long-term investors. Given its strong earnings growth prospects and a recent correction, the stock looks inexpensive from a valuation standpoint.
Restaurant Brands International
The quick-service restaurant chain operator stock Restaurant Brands (TSX: QSR)(NYSE: QSR) has been quite weak since last year. Though it has soared 45% since last March, it has notably underperformed TSX stocks at large. However, it could soon reverse its course amid re-opening and pent-up demand.
Well, the weakness in the stock so far was much on the expected lines given the mobility restrictions. Its financials have taken a big hit since last year, with revenues falling by almost 10% year over year in the last 12 months. QSR’s net income fell by 20% in the same period. However, if you are a long-term investor, Restaurant Brands will likely create significant value post-pandemic.
Restaurant Brands’s wide geographical presence, scale, and solid brand recognition should bode well for its recovery amid the reopening. Popular banners like Tim Hortons and Popeyes will likely act as growth engines for the company.
This could be one of the best stocks to play the reopening rally. Once people are allowed to spend and dine in, QSR should see significantly higher demand, ultimately improving its financials.
Air Canada
Air Canada (TSX: AC) stock is up more than 15% so far this year. However, it has notably underperformed its peers south of the border. U.S. airline stocks rode higher recently after strong demand and re-opening hopes.
Once Canadian authorities ease air travel restrictions, AC stock will likely rally to new highs. Interestingly, it is still trading 50% lower than its record highs of $52 in 2019. Though that seems an uphill climb for now, its improved recovery prospects could drive the stock close to this year’s high of $31.
Notably, Air Canada could take years to reach its 2019 profitability levels. But the stock might continue its upward march on potential revenue recovery and lower cash burn. AC stock is up almost 170% since last March. But it’s still not late to enter AC stock. It does not look stretched from the valuation standpoint, indicating room for further growth.
