It’s tough to find value bets these days, as the stock market roared back from the March lows and regained its lost ground. However, a few stocks hit hard by the pandemic continue to trade cheap and offer good value.
While these TSX stocks are trading cheap, the recovery could take a couple of years. Thus, investors who can commit staying invested in these stocks for at least two years should consider these value bets.
With its stock is down about 21% year to date, Enbridge (TSX:ENB)(NYSE:ENB) offers an excellent opportunity to benefit from capital appreciation and dividend income in the coming years. While the uptick in economic activities is likely to support its mainline throughput volumes, a medical breakthrough in the coronavirus treatment could accelerate its pace of recovery.
Enbridge continued to impress with its financial performance, despite the challenges from the pandemic. Moreover, it generates strong distributable cash flows thanks to its diversified and highly contracted assets.
Enbridge is trading at a forward EV/EBITDA multiple of 11.2, reflecting a discount of about 16% from its three-year historical average. Moreover, its dividend yield stands at 8.5%, which is highly attractive and safe.
Canadian energy giant Suncor Energy (TSX:SU)(NYSE:SU) is also looking attractive on the price front. Suncor stock is down over 56% this year, as an uncertain demand outlook is restricting the recovery. While challenges persist, the reopening of the economy is driving a gradual improvement in its financial performance.
Suncor’s operating loss narrowed sequentially, while funds from operations increased sharply on a quarter-over-quarter basis. While Suncor’s operating performance shows signs of revival, its integrated business model, production mix shift, and focus on cost-cutting measures help navigate the crisis.
Suncor is trading at a forward EV/Sales multiple of 1.6, reflecting a discount of about 30% from its historical average. Moreover, Suncor stock offers a decent dividend yield of 4.7%.
With the easing of lockdown measures, cost reductions, and resumption of domestic operations, Air Canada (TSX:AC) reported a strong improvement in its net cash burn rate on a sequential basis. While deep capacity cuts, closure of international borders, and negative passenger sentiments continue to hurt its financials, its key operating metrics have started to show improvement.
While the continued spread of the virus is likely to hurt passenger volumes, Air Canada’s capacity is expected to improve sequentially. At the same time, the operating loss is expected to narrow down in the coming quarters.
However, Air Canada could take at least a couple of years to return to the pre-pandemic levels. Meanwhile, the reopening of the international borders and positive development on the COVID-19 vaccine could significantly reduce its recovery time and lift its stock higher.
Despite the uncertainty, I believe the worst is over for these TSX stocks. With the reopening of the economy, all these companies are likely to witness strong sequential improvement. So, investors looking for stocks trading cheap could consider buying these top TSX names for multi-fold returns.
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Fool contributor Sneha Nahata has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Enbridge.
Association calls for Halifax restaurants and bars to close amid COVID-19 spread – CBC.ca
The Restaurant Association of Nova Scotia is calling for all restaurants and bars in Halifax to close to dine-in customers for at least the next two weeks because of rising COVID-19 case numbers in the area.
Gordon Stewart, executive director of RANS, said the association’s board of directors held an emergency meeting Monday night and decided unanimously to make the closure recommendation to its members and to Public Health.
Restaurants and bars have been a significant site of COVID-19 transmission in Nova Scotia over the past two weeks, and Stewart said consumer confidence has been “wiped out.”
“It really has hurt. Business has taken a sharp decline. But it’s more than that — it’s that we’re scared that the spread gets so bad that we end up like some of the western provinces right now,” Stewart told CBC’s Information Morning, referring to Manitoba and Alberta, which are experiencing overwhelming coronavirus surges.
Stewart said he’ll leave it to the provincial government to decide what geographical area to shut down, based on the current epidemiology. But he expects it to encompass downtown Halifax, which has been the epicentre of the province’s current outbreak of the coronavirus.
Public Health has not yet endorsed the RANS recommendation. Chief Medical Officer of Health Dr. Robert Strang and Premier Stephen McNeil are scheduled to hold a COVID-19 briefing at 3 p.m. today.
Stewart said the closure recommendation is focused on “full-service” restaurants. He said he supports restaurants in hotels staying open for hotel guests only, and coffee shops staying open for take-out.
The recommendations are not meant for the rest of the province, outside HRM.
Thank you to the restaurants and bars that have already made the hard choice to close to dine-in and to <a href=”https://twitter.com/RestAssocNS?ref_src=twsrc%5Etfw”>@RestAssocNS</a> for this. Let’s do our best to support them: gift cards, take-out and a promise to return when we can. <a href=”https://t.co/d902Xh29Kj”>https://t.co/d902Xh29Kj</a>
Stewart said closing will bring “a lot of repercussions for operators” but he expects it to be effective in slowing the spread of the second wave of COVID-19.
“It’s really not about the economy now. It’s really about the health and the long-term outlook of our communities,” Stewart said.
Over the past few days, many Halifax-area restaurants and bars have already decided to close — some as a precaution and others because of possible COVID-19 exposures on the premises.
Among them is The Old Triangle, where owners closed voluntarily on Monday, only to learn a few hours later that they were in fact the site of a possible exposure.
“Honestly I think it’s the right move,” said Old Triangle co-owner Brendan Doherty of the RANS recommendation.
“We are at a bit of a tipping point so it does make sense to take at least two weeks … to just kind of get reset and get back to where we’ve been.”
“We’ve been very fortunate [inside the Atlantic bubble] … and it’d be nice to go back to that as soon as possible.”
Doherty said a government-mandated shut-down would help his business, and others, because it would allow them to access additional rent relief through federal programs.
“It’s all about cost-saving during a shut down, and rent is the biggest cost we do incur.”
Will 'postal code discrimination' with Brampton and Mississauga auto insurance end? – Brampton Guardian
Many support P.E.I.'s decision to suspend Atlantic bubble – CBC.ca
Many Islanders reacted to news of P.E.I. opting out of the Atlantic bubble by sharing the sentiments of Premier Dennis King — it’s unfortunate but necessary.
King announced that as of 12:01 a.m. Tuesday, non-essential travel in and out of P.E.I. would not be permitted, though he did allow for some flexibility for people rushing to get home.
Opposition leader Peter Bevan-Baker of the Green Party tweeted his support for the premier’s decision.
“I was glad to hear that P.E.I. is temporarily leaving the Atlantic bubble to protect Islanders’ health,” he said.
Penny Walsh-McGuire, CEO of the Greater Charlottetown Area Chamber of Commerce, said she encourages Islanders to take the opportunity to shop local this holiday season.
This temporary closure of the P.E.I. border is a layer of precaution that will allow our business community to continue to operate and to avoid entering the full lockdown situations we see in other parts of Canada.— Penny Walsh-McGuire
“While it is unfortunate that we are moving towards further restrictions, the chamber supports the decision to keep Islanders safe and businesses open, especially as case numbers rise across the country,” she said in a release.
“This temporary closure of the P.E.I. border is a layer of precaution that will allow our business community to continue to operate and to avoid entering the full lockdown situations we see in other parts of Canada.”
Lennox Island First Nation Chief Darlene Bernard said she and many in the Mi’kmaq community travel between the provinces to visit family and friends, but credited King and Chief Public Health Officer Dr. Heather Morrison making the “prudent” decision in the interest of all Island residents.
“I understand the second wave is coming and I think we’re all seeing it across the country and right now P.E.I. is the place to be, right, so we have to try to stay here and shop here and keep things going here in our province,” she said.
“We all know, when we move, that little bug moves, so we have to stop its movement.”
Testing on Lennox Island
Bernard said she and a number of others were tested at a temporary COVID-19 clinic set up Friday on Lennox Island after cases began to spread in Nova Scotia and New Brunswick. She said all those tests came back negative.
“We do travel quite a bit between our communities, to Big Cove and places like that, because our families are very close and that’s why we had the testing done on Lennox, too, because we had people coming in from New Brunswick and Nova Scotia areas and we were travelling outside of the province as well just getting ready for Christmas and all those kinds of things.”
Some people CBC P.E.I. spoke with in Charlottetown also supported the new travel restrictions.
Holland College student Lilly Warner said she is disappointed because it could mean she won’t be able to spend the holidays with family in Halifax, but thinks it is best for public safety.
Dylan Echlin, who is from Toronto but lives in Charlottetown, said he knew it would be unrealistic to think he would be able to visit family over the holidays due to cases in Ontario.
“It’s something they needed to do for sure just because of the impact of what’s going on in the rest of the world and how many cases are evolving with Moncton and Halifax.”
More from CBC P.E.I.
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