There is no doubt that the best time to buy stocks is during a stock market crash. Investors must therefore be prepared for what will follow. This way, you can take full advantage of the opportunities that arise.
However, it will be crucial for investors to be able to distinguish between a lot and a value trap. With that in mind, here’s one TSX stock you’ll want to make sure to avoid.
TSX stocks to avoid
Avoiding certain stocks is crucial for investors for several reasons. You don’t want to make a bad investment and lose money. Plus, you don’t want to commit your money to underperforming. You would miss out on other potentially huge gains.
That is why I would advise investors to avoid Rogers (TSX: RCI.B) (NYSE: RCI) for now. There isn’t necessarily a problem with Rogers, and a long-term investment will probably still make money; it’s just that there are much better choices out there.
In fact, of the top four telecommunications stocks on the TSX, Rogers is the worst choice in today’s environment, which is why I would avoid the stock.
In this market environment, it is crucial that investors only own the best of the best. This means leaving behind companies that still have work to do, like Rogers.
If this is the stability you are looking for, then ECB massive size and diversification is probably a better choice for you. If you are looking for growth, there is no better stock to choose in the industry than Shaw Communications. Investors looking for a good mix of the two should consider Telus.
In March, I warned investors to avoid the stock. Since then, it is the only telecom that is negative and, since the start of the year, has underperformed its competitors.
As you can see, Rogers has clearly outperformed its peers, down more than 15% since the start of the year. This proves that the market sees more potential from other telecom stocks at the moment.
However, if Rogers does eventually turn the tide, seek him out to become a great, undervalued opportunity. For now, I would avoid the stock.
TSX shares to buy
While Rogers is a stock that fits into a great industry for the long haul, as it’s not one of the top companies in the industry right now, it’s not worth an investment.
Conversely, companies that can operate in a struggling industry but are leaders in that industry might be worth an investment. It all depends on what issues are affecting the industry.
If this is a temporary headwind, like the coronavirus pandemic, the sector is probably worth an investment. However, if it is a maturing industry, like newspapers, for example, it would be better to forgo an investment.
A TSX stock that is a leader in its troubled sector is Canadian tire (TSX: CTC.A). Canadian Tire is a diverse retailer in an industry that has been severely affected by the pandemic. Even before that, however, many smaller merchants struggled to keep up with the competition from online shopping.
Canadian Tire investors don’t have to worry about this, however. Not only does the company have a fantastic e-commerce platform itself, but most of the products they sell, consumers prefer to buy in person instead.
Additionally, its various brands and businesses complement each other well and this has helped the company operate relatively well so far, throughout 2020.
The quality of Canadian Tire is the main reason the inventory has recovered quickly. However, if you buy today, you can still lock in its attractive 3.35% dividend, to accompany all the potential for long-term growth.
It is just as important that investors avoid poor TSX stocks as it is to buy the best stocks. So be sure to do your homework; you wouldn’t want to invest in a dud.
Here is one of the TSX stocks that will certainly be a big winner …
This tiny TSX stock could be the next Shopify
A little-known Canadian IPO has doubled in value in a matter of months, and famous Canadian securities selector Iain Butler sees a potential millionaire in the wait…
Because he thinks this fast growing business looks a lot like Shopify, a stock officially recommended by Iain 3 years ago – before it skyrocketed 1211%!
Iain and his team have just published a detailed report on this tiny TSX stock. Find out how you can access the NEXT Shopify today!
Fool contributor Daniel Da Costa owns shares of BCE INC. The Motley Fool recommends ROGERS COMMUNICATIONS INC. CL B NV.