TFSA Investors: 3 TSX Index Stocks That Could Rally Through the End of 2018

Barrick Gold Corp. (TSX:ABX)(NYSE:ABX) is one of a handful of TSX Index industry leaders that could take off in 2019.

| More on:
Arrowings ascending on a chalkboard

Image source: Getty Images.

October was a rough month for the TSX Index, and investors are now looking at the carnage and wondering which names might be setting up for a big recovery heading into 2019.

Let’s take a look at three market leaders that have taken a hit recently, but might be interesting picks for your TFSA portfolio today.

Suncor Energy (TSX:SU)(NYSE:SU)

Oil prices are moving in the opposite direction than most people probably expected right now, given the turmoil in the market. The WTI price is down to US$63 per barrel from a high of US$76 just a few weeks ago, despite ongoing supply issues in Venezuela and the upcoming implementation of new U.S. sanctions against Iran.

Traders might be too optimistic in their expectations that Saudi Arabia will produce more to keep the market balanced. As a result, things could reverse quickly, and a surge back above the recent highs would likely put a nice tailwind behind Suncor’s stock.

On the operational side, Suncor just reported solid Q3 2018 results. Funds from operations hit a record $3.14 billion in the quarter compared to $2.5 billion in the same period last year. The company generated net earnings of $1.12 per share compared to $0.78 per share in Q3 2017.

Suncor’s refining and marketing operations, combined with its ability to get a significant amount of its production to international markets, means the company is less impacted by low Western Canadian Select prices.

At current oil prices, the company is generating strong cash flow that should support a nice dividend increase in 2019. The stock currently trades at $44 compared to $55 in July.

Barrick Gold (TSX:ABX)(NYSE:ABX)

Barrick Gold recently announced a deal to buy Randgold. The acquisition creates a global mining giant that will own five of the planet’s top 10 mines and give Barrick much needed expertise in Africa, where Randgold has managed to find success and Barrick has struggled.

Gold stocks have been out of favour for a number of years, but the recent uptick in the price of the yellow metal is bringing investor interest back to the sector. If gold can muster a meaningful rally through the end of the year and into 2019, Barrick stands to generate significant margins and the stock could take off.

Toronto-Dominion Bank (TSX:TD)(NYSE:TD)

TD’s stock is down from $80 in September to about $73 per share. That’s not a major sell-off, but it gives investors a chance to pick up the banking giant at a reasonable price before sentiment shifts again.

TD’s large U.S. presence bodes well for growth in 2019 and beyond. Rising interest rates should boost net interest margins in Canada and the United States, and TD could exceed its earnings-per-share guidance of 7-10% per year over the medium term.

The company raised the dividend by more than 11% in 2018 and a generous increase should be on the way next year.

At the time of writing, investors can pick up a 3.7% yield.

The bottom line

Suncor, Barrick Gold, and TD are all leaders in their respective markets and currently appear oversold. If you have some cash lined up for your 2019 TFSA investments, this might be a good time to start a new position in these stocks.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Andrew Walker owns shares of Barrick Gold.

More on Energy Stocks

Arrowings ascending on a chalkboard
Energy Stocks

Beat the TSX With This Cash-Gushing Dividend Stock

Canadian Natural Resources stock is well set up to beat the TSX as it continues to generate strong cash flows…

Read more »

energy industry
Energy Stocks

2 TSX Energy Stocks to Buy Hand Over Fist Now

These two rallying TSX energy stocks can continue delivering robust returns to investors in the long term.

Read more »

green energy
Energy Stocks

1 Magnificent TSX Dividend Stock Down 37% to Buy and Hold Forever

This dividend stock has fallen significantly from poor results, but zoom in and there are some major improvements happening.

Read more »

oil tank at night
Energy Stocks

3 Energy Stocks Already Worth Your While

Here's why blue-chip TSX energy stocks such as Enbridge should be part of your equity portfolio in 2024.

Read more »

Solar panels and windmills
Energy Stocks

1 Beaten-Down Stock That Could Be the Best Bet in the TSX

This renewable energy stock could be one of the best buys you make this year, as the company starts to…

Read more »

Dice engraved with the words buy and sell
Energy Stocks

Is Enbridge Stock a Buy, Sell, or Hold?

Here's why Enbridge (TSX:ENB) remains a top dividend stock long-term investors may want to consider, despite current risks.

Read more »

Gas pipelines
Energy Stocks

If You Had Invested $5,000 in Enbridge Stock in 2018, This Is How Much You Would Have Today

Enbridge's high dividend yield hasn't made up for its dismal total returns.

Read more »

Bad apple with good apples
Energy Stocks

Avoid at All Costs: This Stock Is Portfolio Poison

A mid-cap stock commits to return more to shareholders, but some investors remember the suspension of dividends a few years…

Read more »