The Most-Hated Stock in Canada? Why Investors Are Steering Clear

SNC-Lavalin Group Inc. (TSX:SNC) is a very risky investment and a hated stock on the TSX. The company is about to go to trial on charges of fraud and corruption that could result in severe penalties.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Investors seldom express dismay over a particular stock. The usual action is to simply sell and cut losses when the stock is falling. When it recovers and regains strength, buyers return to gain from the potential upside. But when the company has, time and again, been suspected of anomalous dealings, hate sets in.

SNC-Lavalin Group (TSX:SNC) is perhaps the most-hated stock on the TSX today. In my mind, the company caused its own tailspin. The once popular and admired engineering and construction firm is desperately attempting to repair its fractured image. However, the chances are slim if you’re looking in the near future.

The nightmare of 2011

The stock had a respectable run in 2018, hitting as high as $60 before the overall market volatility brought stock prices down. SNC-Lavalin started 2019 at $46.20 and has plunged by 48.35% to $23.86 as of this writing. The company might soon face trial on fraud and corruption charges.

Former company executives are alleged to have paid bribes in 2011 to secure and obtain contracts in Libya during Muammar Gaddafi’s administration. Last week, the judge hearing the case found sufficient evidence to proceed with a trial. SNC-Lavalin tried but failed to reach a settlement. That 2011 event is a nightmare that won’t go away.

SNC-Lavalin chief executive Neil Bruce expected the outcome of the preliminary inquiry. He pointed out that the company is completely transformed. The event happened 20 years ago and the employees involved have long been gone from the company. Still, it’s a nightmare that won’t go away.

Even Prime Minister Justin Trudeau, some government officials, and his most trusted aide are being dragged in a political scandal. The Canadian prime minister is denying insinuations of interfering in the case. There are allegations they want to skirt a criminal trial and assist SNC-Lavalin to secure a negotiated settlement.

Previous brush with the law

SNC-Lavalin had numerous brushes with the law before 2011. The company was swamped with bribery and corruption charges. There were convictions while other cases were amicably settled. Aside from suspected under-the-table deals with foreign governments, allegations with the Canadian government were also raised.

If the Quebec judge found the evidence damning to warrant a formal trial, then the worst is just beginning for SNC-Lavalin. In so far as the company performance is concerned, net income has significantly dropped in 2018. The company is at risk of being banned from securing federal contracts.

Invest at your own risk

SNC-Lavalin’s integrity is at stake because of corporate misconduct. A conviction could lead to disqualification from federal business for 10 years. The business would severely suffer as most of their projects are in civil construction.

I respect the views of some analysts who still predict upside potential for the stock in the months ahead. But the way things are going, SNC-Lavalin is headed to total collapse. No one should invest in a company tainted with corruption.

What Stocks Should You Add to Your Retirement Portfolio?

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now. The Top Stocks that made the cut could produce monster returns in the coming years, potentially setting you up for a more prosperous retirement.

Consider when "the eBay of Latin America," MercadoLibre, made this list on January 8, 2014 ... if you invested $1,000 at the time of our recommendation, you’d have $20,697.16*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 29 percentage points since 2013*.

See the Top Stocks * Returns as of 3/20/25

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 Christopher Liew has no position in any of the stocks mentioned.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Investing

hand stacks coins
Dividend Stocks

How I’d Invest $20,000 in Canadian Stocks for Lasting Generational Wealth

Long-term investors willing to be patient with their money should have these three TSX stocks to build lasting wealth.

Read more »

four people hold happy emoji masks
Dividend Stocks

The Best Canadian Dividend Stocks to Buy in April 2025

Canadian dividend stocks are some of the best options out there, and these few look like some of the best.

Read more »

data analyze research
Investing

5 Canadian Value Stocks to Hold in Your TFSA for Patience-Rewarding Returns

These stocks all pay good dividends and currently look oversold.

Read more »

Canadian dollars are printed
Dividend Stocks

How I’d Use $10,000 to Transform My TFSA Into a Cash-Generating Machine

It may be grim out there, but there are plenty of sky-high dividend yields to choose from on the TSX…

Read more »

tsx today
Stock Market

TSX Today: What to Watch for in Stocks on Thursday, April 10

In addition to the important U.S. consumer inflation report, TSX investors will also keep a close eye on developments related…

Read more »

Canada day banner background design of flag
Dividend Stocks

Top Canadian Stocks to Buy Right Now With $5,000

Looking for some safe, long-term stocks? These Canadian stocks are where you should look first.

Read more »

money goes up and down in balance
Investing

Where I’d Invest $5,000 in 5 Cheap Canadian Stocks for Value and Growth

$5,000 can buy five cheap Canadian stocks offering both value and price appreciation in 2025.

Read more »

cloud computing
Investing

Got $5,000 to Invest? 3 Insurance Stocks to Buy and Hold Forever

Insurance stocks have been great long-term investments. Here are three top stocks to add if the market pulls back.

Read more »