Air Canada (TSX: AC) has been one of the top performers of the past decade with a return of over 3,700%. However, travel restrictions infused by the pandemic have taken a heavy toll on the company’s finances and its stock price. In the second quarter, its revenue fell by more than 89% as it was operating at a fraction of its capacity.
The company has already burned $ 2.8 billion in cash in the first two quarters of this year. In addition, last month the Canadian government extended travel restrictions to September 30, which could add to the financial burden on the company.
However, the company has ample liquidity of $ 9.12 billion to get out of this crisis. The resumption of domestic flights and a drop in its cash consumption are encouraging. Meanwhile, demand for relaxation of the travel restriction has increased across the industry. With many countries already easing restrictions, I expect Canada to follow suit in the fourth quarter.
Even though passenger demand could take a few years to reach pre-pandemic levels, Air Canada, being a market leader, could rebound more quickly. So, with Air Canada trading over 60% less for the year, it offers an attractive entry point for long-term investors.
Second on my list is Pipeline Pembina (TSX: PPL) (NYSE: PBA), which has lost nearly 35% of its share value this year. Falling demand for energy in the midst of the pandemic lowered revenues for its Marketing and New Business division, which resulted in lower overall revenues in the second quarter.
Meanwhile, its core business has remained strong and resilient as it is heavily contracted and mostly immune to commodity prices. As a result, the Pipeline and Facilities divisions recorded volume and revenue growth during the quarter. The company also pays dividends every month. The decline in its share price has boosted its dividend yield to an attractive 8%.
Due to its contractual arrangements and diversified operations, the company expects to earn 90-95% of its Adjusted EBITDA for 2020 through paid contributions. So, given its high dividend yield and stable cash flow, Pembina Pipeline offers an attractive buying opportunity at these levels.
Communications de Rogers
My third choice would be Communications de Rogers (TSX: RCI.B) (NYSE: RCI), which has lost over 18% of its market value this year. The shutdown caused by a pandemic took a heavy toll on the company’s finances and its share price.
In its second quarter, the company’s revenue fell 16.5%, while its adjusted EPS fell more than 48%. Declining roaming revenues due to travel restrictions and declining excess income as more customers switched to unlimited data plans had driven down sales for the company.
Meanwhile, the outlook for the company looks good. It was the first company to deploy a 5G network in Canada and is well ahead of its peers. As a pioneer, the company could increase its subscriber base in the coming quarters. The company also plans to expand its connected home services across the country.
So, given its strong growth prospects, I believe Rogers Communications can generate impressive returns over the next three to five years. Meanwhile, the company also pays quarterly dividends. Its forward dividend yield currently stands at 3.8%.
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The Motley Fool recommends PEMBINA PIPELINE CORPORATION and ROGERS COMMUNICATIONS INC. CL B NV. Silly contributor Rajiv Nanjapla has no position in any of the stocks mentioned.