By Ian Clark CIM, CFP, Steve Bokor CFA & Shannon Gerigs of Ocean Wealth at PI Financial
“Should I Stay or Should I Go Now” was the 1982 hit track from the Clash, but it is the question we are asking ourselves during this pandemic. Now that we have been locked up with nowhere to go for several months and as we enter stage three of the reopening here in British Columbia, ‘staycation’ is the latest buzz word.
While the first week of July might not yet be exactly what we would call summer weather, like many of you, we are all wishing for a holiday. Due to COVID-19, some of those working in our office had to cancel their spring-time vacation plans, which involved visits to far-off places. We are now approaching the end of week 15 of our new “working-from-home” lives. The scenery is often the same on the commute from the bedroom to the kitchen and finally around the corner to the home office. We are betting this is the case for so many who work from home. It may be starting to feel lackluster. A “holi-stay” would be the right remedy for these COVID blues.
Today we explore which trends and stocks are likely to outperform as we take you through how we’ll spend our time in B.C. this summer. There are winners and losers in our new work/leisure paradigm. Some of those winners might represent a great investment opportunity!
Since the chance of life returning to “normal” anytime soon appears to be waning, some of us are turning to the bountiful wilderness that surrounds us. Making our home on beautiful Vancouver Island has its advantages. No wonder scores of Canadians are flocking to hotel and camping reservation sites. Many of you are probably thinking the same thing. While B.C. residents are being given preferential access to campground bookings, with so many campers trying to book reservations, the BC Parks website actually crashed on opening day. There were as many as 10 reservations processed per second before 11 am that day!
All the while, there is a surge in consumer spending to deal with being pent up for so long. You might want to ponder how this has benefited companies that deal with local travel. Think names like Vista Outdoors, Camping World and Thor Industries, and Winnebago (especially if you cannot get a campground reservation).
As families manage to get an out-of-town holiday this summer/fall, you might consider the potential beneficiaries. If you take a road trip, chances are you are going to visit a gas station managed by Parkland Fuels and while you are there, you are likely picking up a road map or two. If it is a water-based adventure, think BRP in Canada (they make jet skis) or Johnson Outdoors and Marine Products Inc. in the US.
Consider the companies that stand to benefit the most when our lifestyles change so dramatically. If the lock-down continues well into October and November, you can bet that the snowbirds among us will stay grounded this winter. Grocery stores, like Loblaw’s for example, may see higher sales through the summer and into the fall and winter months. We are pretty sure alcoholic beverage makers like Constellations brands will survive the current environment as well.
The staycation complements those folks still working from home and doing so in comfort. We attend and host many ZOOM meetings a week and have to say, there is not a tie among the masses, including ourselves. Yet, Under Armour and Lululemon are definitely the unwritten de rigueur dress code. Lulu’s rapid transition to the online sales world has pushed its stock up well over 30% year to date. Of course, you got to look sharp when you’ve been invited to take part in a distance cooking class via ZOOM but the jury is still out on who gets to wield the sharp cutlery in a confined space. I am guessing there will be a chorus of smoke alarms around 7:30 pm followed by a quick call to Grubhub, Uber Eats, or Skip the Dishes (now owned by UK’s Just Eat). Later, expect one spouse to go online at Williams and Sonoma for a new set of pots and pans.
Staying on the same theme, if the Coronavirus-led shutdown continues for much longer, single outlet restaurants will continue to struggle, and some may ultimately shut down for good, while fast-food chains (McDonald’s and Yum) partner up with the aforementioned delivery services or use their own (think Domino’s Pizza). It’s not five-star cuisine but rattled stay-at-home workers facing a barrage of complaints from kids stuck at home will relish the arrival of salt-laden dishes. Domino’s is another stock that has risen over 30 percent so far in 2020.
Of course, for many, the prospects of a vacation in a far-off place have melted faster than a Dairy Queen Ice Cream cake at a 1 pm birthday party, though we are betting that parents are making a run for backyard fun “must-haves” courtesy of Home Depot and Canadian Tire in the form of new lawn chairs, BBQs, and inflatable pools. Lowe’s has tapped into the demand for do-it-yourselfers, whether that is starting a home garden or finishing off those fixer-upper projects that are still on the to-do list.
While when it comes to new investing opportunities in 2020, think outside the box. See if you can get ahead of the masses on companies which are not just high-tech or healthcare stocks but those that help satisfy the insatiable demand for consumer discretionary items that fit the staycation lifestyle.
PI Financial Corp. Member- CIPF
Information contained herein represents the views of the writer and not those of PI Financial Corp./Ocean Wealth and based on assumptions which the writer believes to be reasonable. The material contained herein is for information purposes only and is not to be construed as an offer or solicitation for the sale or purchase of securities.
