It is no secret that everybody around the world is tired of the pandemic and they want it to end. As the vaccination rollout continues and we see improvements worldwide, global economies are expected to spring back to life.
The COVID-19 pandemic and ensuing lockdowns devastated several high-quality companies trading on the stock market. As the economies begin to open, investors are looking for value stocks that could prove to be excellent reopening plays that can provide them with substantial returns with improving conditions.
Of course, not all assets devastated by the fallout from the pandemic might be good recovery bets for your portfolio. Today I will discuss two TSX stocks that stand to benefit the most from borders reopening worldwide.
Air Canada (TSX:AC) was one of the worst-hit companies in Canada due to the pandemic. As air travel demand effectively fell out of the sky, the Canadian airline stock followed suit. Passenger volumes have remained much lower than pre-pandemic levels despite high capital expenses. As travel restrictions continue to be lifted, it’s only natural that the pent-up demand will gradually make things better for the airline stock.
The vaccine rollout worldwide has accelerated, allowing many countries to reopen their economies and international borders. As the demand for international and domestic travel rises, Air Canada can pack its passenger jets with more people and begin to offset the devastation caused by the pandemic.
Despite the pent-up demand for air travel, many passengers might choose not to fly to other countries due to their extensive quarantine restrictions. Once things begin improving in other countries, Air Canada could truly capitalize on the government’s bailout and come out of the corner swinging both its arms and ready to beat the markets.
Restaurant Brands International
Restaurant Brands International (TSX:QSR)(NYSE:QSR) might not be a famous name itself, but the company boasts three top businesses under its belt. The company owns and operates Burger King, Tim Hortons, and Popeyes Louisiana Kitchen. As the pandemic-induced restrictions began, restaurants were forced to close their doors to customers.
The restaurant industry is inherently a defensive sector because it offers cheap food that can be crucial for people during economic crises. Businesses like RBI traditionally perform well during volatile market conditions.
However, the pandemic forced restaurants to close down and devastated revenues. Reopening international borders are also a sign that domestic restrictions that forced restaurants to rely on deliveries, drive-thru, and digital sales will also go away.
Restaurants owned by RBI did well to offset the losses of dine-in sales through its drive-thru, deliveries, and digital sales. Easing restrictions could allow RBI to enjoy better financials through rising revenues through dine-in sales.
The pandemic devastated several sectors of the Canadian economy. The restaurant and travel industries were among the worst-hit. Unlike companies across most other sectors, restaurants and airlines did not recover as well after the initial sell-off frenzy due to the pandemic.
As the economy begins to go on the mend, the economic reopening along with borders reopening could trigger a significant boost for many high-quality companies.
Air Canada stock and Restaurant Brands International stock could be excellent assets to consider adding to your portfolio if you want to invest in the top recovery bets.
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 recommends Restaurant Brands International Inc.