2 Top TSX Stocks I’d Buy High and Sell Higher

TFI International (TSX:TFII)(NYSE:TFII) and TD Bank (TSX:TD)(NYSE:TD) are top TSX stocks for Canadians to buy, even at all-time highs.

| More on:

Don’t be afraid of the all-time high list when it comes to top TSX stocks. A stock price at a fresh new all-time high may be a symptom of overvaluation, but oftentimes, it can be an indication of a winner that’s slated to keep on winning. As such, even value-conscious investors should be more willing to check out the all-time high list because, in the end, value investing ought to be about paying less to get more.

You’ve probably heard “buy low and sell high” is the strategy to make money in the stock market. By doing so, you could also be vulnerable to buying low and selling even lower, as value traps tend to disguise themselves as bargains. Undoubtedly, the all-time low list may be full of such names that Canadian investors should be wary of.

A better strategy, especially these days, is to buy high and sell higher. And in this piece, we’ll have a look at two top TSX stocks, which, while at or around new highs, actually look undervalued relative to its improving macro backdrop and its long-term growth potential.

Without further ado, consider TFI International (TSX:TFII)(NYSE:TFII) and TD Bank (TSX:TD)(NYSE:TD).

TFI International

TFI is a less-than-load (LTL) trucker that’s come a long way since the self-inflicted 2018 pullback due to operational issues. The company has improved upon its operational efficiency in a big way. And with the tides finally pushing in its favour, TFI is a top TSX stock on the all-time high list that could very well continue making new highs on the back of further strength in demand for transportation of goods.

After soaring over 325% from its March 2020 bottom—a time I urged investors to load up on the stock—shares look more fully valued at just shy of 30 times trailing earnings. Given profound industry tailwinds, though, I think some serious multiple compression could be on the horizon, making shares seem more expensive than they are at this juncture.

The company’s strategic acquisition of UPS freight is a big deal. As we move into the “Roaring 20s” environment that’s more than likely to see booming demand for a wide range of products. The stock trades at 2.2 times sales, which, I believe, still makes TFI stock look a bargain in spite of its incredible run.

TD Bank

TD Bank is another winner that’s poised to keep on winning, possibly for many years to come, as the macro tailwinds finally present themselves. Interest rates are probably headed higher from here, and the Big Six banks are due to have their bottom lines padded.

While TD Bank and the broader basket have been soaring of late, I still view them, especially TD stock, as being undervalued relative to the magnitude of tailwinds on the horizon. At the time of writing, TD trades at 1.8 times book and 11.2 times trailing earnings, making it one of the cheapest Big Six bank stocks right now.

With a high-quality retail banking business and greater U.S. exposure than its peers, TD stock deserves a premium multiple, not a discount one. As such, I view TD stock as one of the best banks for your buck at this juncture and would encourage investors lacking in financials to pick some shares up as they cool down into the summer.

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 Joey Frenette owns shares of TORONTO-DOMINION BANK. The Motley Fool has no position in any of the stocks mentioned.

More on Bank Stocks

Financial analyst reviews numbers and charts on a screen
Bank Stocks

1 Superior Stock Down 7% to Buy and Hold for Life

Scotiabank is still one of the best of the big banks, so let's get more into why.

Read more »

customer uses bank ATM
Bank Stocks

1 Canadian Banking Giant That’s My Top TSX Pick

From recovery to momentum, here’s why I’m backing TD Bank as my top TSX stock pick this year.

Read more »

woman checks off all the boxes
Dividend Stocks

CPP Collectors: Here Are 3 More Red Flags the CRA is Watching

Worried about the CRA? Stop immediately by taking these steps and investing wisely.

Read more »

some REITs give investors exposure to commercial real estate
Stocks for Beginners

A 3.4% Dividend Yield? I’m Buying This Dividend Darling and Holding for Decades

Grab this dividend yield while it lasts, and never worry again while holding the top choice on the market!

Read more »

Piggy bank with word TFSA for tax-free savings accounts.
Stocks for Beginners

I’d Put All My $7,000 TFSA Contribution Into This Dividend Stock Right Now

If I'm looking to make some extra cash, then this dividend stock is my first stop.

Read more »

Real estate investment concept
Bank Stocks

Forget Royal Bank of Canada (TSX:RY)! There’s a New King in Canadian Banking

Here's why EQB stock could deliver outsized gains compared to RBC stock over the next 18 months.

Read more »

open vault at bank
Bank Stocks

This Banking Giant Yields 5.6% and Dominates the Canadian Market

This TSX bank ETF is in a league of its own.

Read more »

investor looks at volatility chart
Dividend Stocks

Buy the Dip: 3 Canadian Stocks to Buy Now, Even if the Markets Drop

With energy, banks and mining on your side, these are some of the best buys when the market dips.

Read more »