Summer is still with us, but fall is just around the corner. Which stocks should Canadian investors be adding to their wish lists before the seasons change? Investors may wish to take full advantage of the situation to build a mini barbell of stocks. A balance of near-term gains in beaten-up names and longer-term safety stocks could suit a variety of investment types, as the economy navigates a staggered reopening.
Mix recovery growth with safe-haven stocks
Much of Canada faces an uneven reopening of the economy this fall. With kids going back to school, and CERB being phased out, there’s going to be some extra uncertainty in the markets. Investors should also be keeping an eye on political changes south of the border, with the U.S. election coming up in November.
There’s also going to be some pressure on businesses to bounce back. Look at Air Canada and Cineplex, for example. Both businesses are at the forefront of a campaign of reopening. Investors will therefore be keeping a close eye on their upcoming earnings reports during the latter half of the year.
Get defensive with gold
Newmont (TSX:NGT)(NYSE:NEM) is looking like a better-priced version of Barrick Gold at the moment. While Barrick has been high on the list thanks to Warren Buffett’s about-turn on gold, Newmont has better market ratios. It also pays a better dividend, with a 1.6% yield compared with Barrick’s 1.1%. Investors should be looking to gold right now, as uncertainty continues to manifest itself in the markets.
Speculative plays on the reopening of the economy might also factor into one’s buying strategy this fall. Names to consider include Air Canada and Cineplex. Both of these stocks could see some improvement, as the economy begins to pull itself out from under the crushing boulder of the pandemic.
While seeing a movie or taking to the skies may not be on everyone’s immediate agenda, slow growth may be forthcoming for any business weighed upon by quarantine conditions. Air Canada and Cineplex in particular represent wide-moat picks that, in normal circumstances, represent market leaders at the top of their game. But there could be a safer way to play a reopening.
A diversified stock with huge comeback potential
For the same reason, Rogers Communications (TSX:RCI.B)(NYSE:RCI) would be a solid name to stack shares in as the economy gears up for reopening. This name has three broad prongs to its business trident. Its wireless segment represents a rough third of the top end of the telcos market. Its other strong suits are sports media and sports teams. The latter suffered an advertising revenue drought and sidelined teams — both of which are reversible.
How much upside could these names have? A counterweighted investment of Newmont with a “comeback kid” stock such as Rogers could see significant gains in a post-pandemic market. Rogers has a high price target consensus of $83. That’s around 48% upside potential. Meanwhile, gold is continuing to climb higher, while is likely to feed back into names like Newmont.
