After what seems like forever, the reopening is finally underway mid-way into 2021. With each day, more people are getting COVID-19 vaccines in Canada, and we are getting closer to achieving the much-needed herd immunity against the deadly disease that has caused this pandemic.
Most Canadian stocks recovered rapidly after the February and March 2020 sell-off frenzy caused by the onset of COVID-19. However, many stocks were still trading at a significant discount from pre-pandemic prices. The reopening economy could play a massive role in helping the beaten-down stocks appreciate in the coming months.
Today I will discuss two such stocks that could offer substantial upside potential to your investment portfolio.
Restaurant Brands International
Restaurant Brands International (TSX:QSR)(NYSE:QSR) is a giant in the fast-food industry with big names like Tim Hortons, Burger King, and Popeyes Louisiana Kitchen under its belt. RBI has enjoyed a diverse mixture of performances over the years, as Tim Hortons continues to be a sore spot for the company that has not lived up to investor expectations. Tim Hortons was a vital part of the morning routine for many working Canadians, and the pandemic completely crumbled its revenues.
The slack was picked up by Popeyes and Burger King, offsetting the losses through digital, delivery, and drive-thru sales. As the economy looks poised to reopen, Restaurant Brands International is well-positioned to take advantage of dine-in, digital, delivery, and drive-thru sales to improve its overall financials and propel itself to new heights.
Alimentation Couche-Tard (TSX:ATD.B) is not a retailer that suffered as much as many other companies during the worst periods of the pandemic. The stock managed to hold its own during the first three waves and seems likely to continue showing resilience if any future waves come along.
As restrictions continue to lift, Alimentation Couche-Tard stock could get a significant boost in its revenues. The company can expect foot traffic to increase to its locations and improve its financials further. Alimentation Couche-Tard is also ready to make its next big acquisition.
It’s possible that the retailer could make a move for a grocery giant or convenience store chain by the end of this year and expand its reach into more regions. The stock is trading for $45.29 per share at writing and boasts a meager 0.77% dividend yield. While its dividend yield is low, the stock presents a significant upside potential for your portfolio through capital gains.
The pandemic has been rough on the economy. Many assets trading on the stock market had a rapid recovery a few months after the pandemic-fueled sell-off frenzy. However, several stocks directly affected by the pandemic did not have the opportunity to recover well enough.
With the continuing vaccine rollout and reopening economy, the stock market has excellent recovery plays to consider for massive upside potential. If you are looking for recovery stocks to capitalize on the recovery, Alimentation Couche-Tard and Restaurant Brands International could make excellent stock picks to consider.
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 Adam Othman has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends ALIMENTATION COUCHE-TARD INC. The Motley Fool recommends RESTAURANT BRANDS INTERNATIONAL INC.