3 COVID-19 Stock Market Tips

You can find some great stocks that will easily adapt and recover from the changes the COVID-19 pandemic brought upon the world.

| More on:

Global stock markets have been stressful for everyone this year. The COVID-19 pandemic crisis cut revenue for many firms, as consumers chose to stay at home. Luckily, the Canadian government responded quickly with the Canadian Emergency Response Benefit (CERB).

On the bright side, dips in the market like these are a great time to buy stocks. You can even use this time to take advantage of dollar cost averaging in investing.

Dollar cost averaging is an investment strategy where you add to your current positions when the price of the stock falls. The average price you paid for the entire position decreases. When the market value rises again, you will earn on the upside.

Alternatively, you can find some great stocks that will easily adapt and recover from the changes the COVID-19 pandemic brought upon the world.

Stock tip #1: Avoid COVID-19-impacted travel stocks

A recent poll showed that 85% of Canadians want to close the U.S.-Canadian border throughout the rest of 2020. Moreover, 90% of Canadians agree with mandatory 14-day quarantine restrictions for anyone who enters Canada. Lastly, 92% of Canadians don’t see themselves travelling into the United States this year.

What does this mean for travel stocks like Air Canada? These aren’t the best options to buy the dip on the market. In fact, you might want to avoid these altogether right now.

There will come a time to re-enter travel stocks. Now is not that time. Once the world gets closer to some resemblance of normalcy, then we can talk about investing in travel stocks.

Stock tip #2: Buy uptrending stocks

Uptrending stocks are your best bet. Alimentation Couche-Tard (TSX:ATD.B)(TSX:ATD.A) initially fell during the March stock market selloff and then climbed to new highs. The stock is now up 12.57% this year.

ATD.B Chart

Alimentation is a strong Canadian brand with a global presence. The company owns convenience stores throughout North America, Western Europe, Eastern Europe, and Asia.

The price-performance of this company is actually pretty surprising. The company had the following to say about the impact of coronavirus on the firm’s goals:

“Due to the implementation of restrictive social measures in the various geographies in which the corporation operates, the COVID-19 pandemic had a meaningful impact on financial results, mostly driven by declining traffic across the network. Fuel volumes declined rapidly following the initial response to the crisis but stabilized during April, while fuel margins overall benefited from the rapid and steep decline in crude prices as well as by changes in the competitive landscape. Merchandise sales benefited from a higher average basket which helped offset in part the lower number of visitors.”

Stock tip #3: Avoid overvalued stocks

Sometimes it can be difficult to tell when a stock is overvalued. Alimentation is a good example of an ambiguous stock pick. It is uptrending during a coronavirus pandemic that is having a meaningful impact on its bottom line.

Positive price moves that seem to counter logic, and facts might be telling you that something else is going on. Alternatively, the stock may be due for a downward correction.

Ultimately, no investment comes without risk. Use your best judgement and research your options thoroughly before making any decision.

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 Debra Ray has no position in any of the stocks mentioned. The Motley Fool recommends ALIMENTATION COUCHE-TARD INC.

More on Dividend Stocks

Make a choice, path to success, sign
Dividend Stocks

Is Fortis Stock a Buy for its Dividend Yield?

Fortis has increased the dividend for 51 consecutive years.

Read more »

Middle aged man drinks coffee
Dividend Stocks

Is Brookfield Stock a Buy, Sell, or Hold for 2025?

BAM stock recently jumped after beating earnings. But is it still a buy, or is it better to wait?

Read more »

Electricity transmission towers with orange glowing wires against night sky
Dividend Stocks

3 Top Canadian Utility Stocks to Buy in November

Are you looking for some top Canadian utility stocks to own? Here's a look at three must-have options for any…

Read more »

View of high rise corporate buildings in the financial district of Toronto, Canada
Dividend Stocks

Is First Capital REIT a Buy for its 4.8% Yield?

First Capital is a REIT that offers you a tasty dividend yield of 4.8%. Is this TSX dividend stock a…

Read more »

TFSA (Tax free savings account) acronym on wooden cubes on the background of stacks of coins
Dividend Stocks

TFSA Passive Income: 3 Stocks to Buy and Never Sell

Stocks like Fortis Inc (TSX:FTS) are worth holding long term.

Read more »

Electricity transmission towers with orange glowing wires against night sky
Dividend Stocks

Canadian Utility Stocks to Buy Now for Stable Returns

Given their regulated business, falling interest rates, and healthy growth prospects, these three Canadian utility stocks are ideal for earning…

Read more »

nuclear power plant
Dividend Stocks

The Best Canadian Stocks to Buy and Hold Forever in a TFSA

TFSA investors can buy and hold these Canadian stocks to generate above-average, tax-free returns over the next decade.

Read more »

Person holding a smartphone with a stock chart on screen
Dividend Stocks

Is Telus Stock a Buy for its 7.3% Dividend Yield?

Although the 7.3% dividend yield Telus offers is attractive, it's just one of many reasons why the telecom stock is…

Read more »