As we head closer to the end of the year, the markets continue to defy expectations by inching ever higher than before instead of going through a much-feared correction. Investor sentiment is high, and as more of them continue to invest in the bargain stocks in the market today, the S&P/TSX Composite Index is heading higher.
In a bullish market environment where it seems that there are not many stocks left with upside potential, it can be challenging to find the right value stocks to buy right now.
Most of the stock market recovered rapidly after the sell-off frenzy in February and March 2020 and soared past all-time highs. However, not all companies were fortunate to be a part of that miraculous recovery. Today, I will discuss two Canadian stocks that suffered massive downturns with the onset of COVID-19 and are well-positioned to provide investors with significant upside as things continue to improve.
Cineplex
It is safe to say that Cineplex (TSX:CGX) has not had it easy since the pandemic and ensuing lockdown measures came about to curb the spread of the contagious disease. Filling up enclosed spaces with hundreds of people so that they can enjoy the latest blockbuster movies was an impossible proposition during the peak of the pandemic.
Moviegoers were devastated that they would have to stream their favourite new releases at home. The company saw its revenues virtually diminish to zero in a matter of a few days. However, the increasing vaccine rollout could change the picture for the theatre giant. COVID-19 is likely going to persist, but more as endemic.
A relative return to normalcy could see cinemas reopen with full flair, allowing Cineplex stock to soar as its revenues rise again.
Suncor Energy
Suncor Energy (TSX:SU)(NYSE:SU) is a high-quality integrated energy company that I have not talked about in a while. The energy sector suffered significant losses due to the effects of the pandemic. The space has improved drastically this year as the rising demand for crude oil has bolstered the performance of energy companies like Suncor.
The longer oil prices remain high, the more room Suncor Energy stock will have to continue putting in a strong performance quarter after quarter. There is still a significant risk involved with investing in the energy stock in case crude oil tanks. However, the risk to reward tradeoff might be worth it for investors who have higher risk tolerance.
The stock is trading for $23.47 per share at writing and boasts a juicy 3.58% dividend yield.
Foolish takeaway
Suncor Energy stock and Cineplex stock did not manage to recover rapidly like much of the stock market due to industry-specific challenges brought on by COVID-19 and the measures necessary to curb the spread of the novel coronavirus.
As the vaccine rollout continues and the situation gradually improves, reopening global economies and easing restrictions could result in a significant boost for the underlying businesses and send share prices soaring. It might be a good idea to at least keep a close eye on Suncor stock and Cineplex stock and wait for the opportunity to pounce before it is too late.
