Well, whether we like it or not we are starting to open things up for business again. Many companies and organizations have been making lots of changes and new procedures in how to deal with what is happening with the global pandemic. From installing Plexiglas, giving out/having masks for sale to using sanitizer before walking into and while leaving a place of business. Not to mention making sure that people social distance while being out and about in these places of business. But the question really is, should these places already be open?
My short answer? Yes. I get it, the second wave is going to come in the next month or so because we opened up and the virus is going to spread again. I don’t know if it is going to be as bad though considering the fact that the majority of people in Canada are already practicing their proper hand washing, wearing masks, social distancing and using hand sanitizer whether they touched something or just thought they did. Yes, i’m guilty of that one to. But we need to open up because at this point the government can only do so much for us. People are losing their jobs, their houses and basically everything else.
This Pandemic has hit basically every single industry, some harder than others. The main industries to take a beating are travel and tourism, entertainment and the oil and gas sector. Companies like Carnival PLC(CUK-$12.09USD), Air Canada(AC-$16.21CAD) and Expedia(EXPE-$85.05USD) have all taken major blows from massive layoffs, reduced pay and the unknown of whether or not the company will be able to last through this. For tourism its extra touchy because the Canada and US boarder is still closed and will probably remain that way until the US gets their act together. Not to mention traveling anywhere outside of North America, good luck with that one. Who would really want to right now anyways with cases on the rise again? I feel that people are not in the mood or position right now to be stuffed into an airplane or a cruise ship even in the event that they do all their own due diligence in checking to see if someone is infected. Its an industry that I will personally keep out of for now.
Entertainment on the other hand is a mixed bag. You have companies like Cineplex(CGX-$7.92CAD), Netflix(NFLX-$493.16USD) and Disney(DIS-$113.63USD) that are all opposite of each other. Cineplex has decided to open their theaters but looking at the map of seating they can only allow about 1/3 the amount of people into the theater. That is going to cut down big time on attendance, but at least you won’t have as many staff there. They do however make the majority of their money on concessions. Still, things are not going to well for them especially since their deal with Cineworld fell through. But then you look at a company like Netflix who has inadvertently benefited from the pandemic. Their streaming service has pretty much gotten every person with the internet through this by providing the entertainment that we all need. And then you have Disney who is on both sides of the coin. They couldn’t have released their streaming service at a better time really, it has really saved their butts. Having to close down their parks however has really put a damper on things for them.
Lastly I would like to talk about the Oil and Gas industry. Though this industry has been hit very hard by all of this it still has not shut down. We had a rocky start to this whole global pandemic with Opec and Russia driving the price down and kicking the industry while it was already plummeting. But we have started to recover and businesses have started to hire people back and get people back to work. The price of oil is going back up now and so is the price of gasoline. Even Warren Buffett must see some sign of life as Berkshire Hathaway(BRK.B-$181.15USD) just invested $10 Billion into Dominion Energy (D-$74.22USD). Now that things are opening up and people are going out to the lake or going on road trips(since that’s really all you can do right now) small businesses don’t really have a choice but to open back up. As for the big oil and gas companies they never really shut down, they just scaled back. Many lay offs and salary cuts as well in this sector and a big majority of companies have started to recover but its going to take some time. Most people feel that it will never go back to what it was before the pandemic but I disagree, I just feel it will take time.
It is going to take a long time for things to go “back to normal” or if what is happening now is the new normal. It felt like everything changed so quickly to shut down and suppress Covid-19. We now have the tools and knowledge though to deal with this situation better. I feel that opening things back up is very realistic and is something that needs to happen, but safely and properly. I’m not all about “big government” but in situations like this where they are more or less calling the shots on what you can and cannot do we just need to do the right thing and pay attention. Things are different now and respecting how things are opening back up means following the different rules businesses have put in place to protect us and them. If we don’t do that then things will not get better and we will have a second wave that will be much worse. I believe that we will do the right thing and come out of this better and by “we” I mean us Canadians.
From an investor stand point and especially a long term investor position I feel that now more than ever we need to watch the market. Look for opportunities and take advantage of these low prices. As things open back up we will start to see share prices move back up as well especially once businesses pick up steam. I know that I have been averaging down on all of my stocks because I believe that they will go back up again. Do your Due Diligence, use the tools that we have laid out for you and pick a real winner.
Disclaimer* All share prices are from the end of trading today July 7, 2020.