Restaurant stocks have taken a hit amid the COVID-19 pandemic. But as cities are reopening and the industry’s slowly allowing more customers back in, there could be a bit more optimism surrounding restaurants in the coming months.
Popular restaurant stocks Boston Pizza Royalties Income Fund (TSX:BPF.UN) and A&W Revenue Royalties Income Fund (TSX:AW.UN) have seen their share prices crater this year by 36% and 28%, respectively. With both stocks suspending their dividend payments due to COVID-19, there’s really not a whole lot of reason to invest in either stock right now.
For contrarian investors, however, it could be an opportunistic time to buy while their shares are still low. These are two of the strongest and most well-known restaurant chains in Canada and they’re definitely good bets to survive the pandemic. And as they start to recover, these funds could start paying dividends again and their share prices will rise.
The only question for investors is when that might happen. If COVID-19 cases start to surge due to cities reopening too quickly, that could be a setback for the industry. That’s why there’s still a danger there may be a subsequent crash still to come.
For investors, the safer bet is to keep an eye on these stocks and wait for at least another month. If these restaurants are able to operate with some level of normalcy and if concerns start to subside relating to the COVID-19 pandemic, it could be a sign that the worst is over. And if that’s the case, both of these funds could be attractive buys.
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