Are TSX Financial Stocks Undervalued?

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The pandemic has created a lot of market volatility on the Toronto Stock Exchange this year. Money was coming out of financial stocks and going into sectors like technology and gold. This means that savvy and courageous TSX investors have a number of attractive buying opportunities in financial stocks.


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While it might sound like a scary proposition to invest in the current losers in the market, it’s actually one of the best decisions you can make for your retirement. To make money on the stock market, you have to buy low and sell high.

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If you take a long-term mindset for your investing decisions, you can make a lot of money in TSX Financials right now. While no asset purchase is risk free, a diversified portfolio is your best bet.

Diversify your TSX portfolio

A diversified portfolio is the right way to go now. While it may be tempting to invest only in high-tech industries like technology, the last thing you need is a market correction to destroy your plans.

Very few experts would recommend that you invest too much in TSX market winners while ignoring lagging sectors like financial stocks. Don’t give in to over-enthusiasm for just one title or industry. Instead, diversify your investments on the TSX for long-term success.

Make sure you have spread your investments across all sectors, like financials and industrials, even if those assets haven’t performed as well this year. At the very least, put some of the top TSX stocks in those sectors on your watch list.

Canadian Imperial Bank of Commerce

The March stock market crash caused the price of Canadian Imperial Bank of Commerce (TSX: CM) (NYSE: CM) to fall to a 52 week low at $ 67.52. CIBC’s stock price has since rebounded to $ 104.01 on the TSX at the time of writing.

The banking industry may be experiencing higher than normal default rates, but that’s no reason to panic. Canadian banks are among the safest in the world.

If you don’t already have this stock in your TSX retirement portfolio, it’s a good idea to put it on your watch list and start buying stocks. As with any asset, spread your purchases over time.

The prices fluctuate from day to day. If you want to get what you pay for, the best strategy is to wait for the days when the stock is trading low, and then make your buy.

Don’t completely avoid financial stocks

While financial stocks aren’t trading at as high a level as tech or gold right now, that doesn’t mean you should avoid them altogether. They could easily pick up on the TSX over the next six months to a year.

In addition, it is not advisable to stay out of a market sector. If you want to have a sufficiently diversified portfolio, try investing in some of the less popular industries on the TSX right now.

Market sentiment is constantly changing. Spreading your nest egg among several baskets is the only way to stay on top of the most popular assets.

Canadian bank stocks also pay large dividends. So your retirement portfolio could earn fantastic income from TSX financial stocks.

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Fool contributor Debra Ray has no position in any of the stocks mentioned.

The Post Are TSX Financial Stocks Undervalued? first appeared on The Motley Fool Canada.

Video: Here’s how the money was moved this week (TheStreet)

This is how the money was transferred this week

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