These 3 TSX Stocks Might Be Getting a Little Too Expensive

These TSX stocks are up double digits this year, but they’re now looking so expensive that I’d probably stay away in the near future at least.

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The TSX today continues to trade downwards, with only some improvement coming along only recently. That comes in part of a lower-than-expected rate hike by the Bank of Canada by 50 basis points. Yet this might mean some TSX stocks are seeing a rebound that isn’t quite worth the investment quite yet.

In fact, there are some TSX stocks that are downright expensive in this environment. There has been some unwarranted focus on companies that could do well during a recession, and this has pushed prices beyond their worth.

Today, I’m going to look at three overbought TSX stocks you might consider selling.

Canadian Natural Resources

Canadian Natural Resources (TSX:CNQ) has been a strong performer this year, with shares currently up a whopping 62% year to date. It’s been growing thanks to the increase in oil and gas prices, and as the company focuses primarily on Western Canada, this has been a major source of revenue during the surge.

However, with shares up so high, the stock now looks overbought. It currently has a relative strength index (RSI) of 71.53, which is higher than overbought territory of 70. And honestly, shares could drop in the near future with so many countries looking to renewable energy.

That being said, it still is a financially sound company that could bring in serious cash over the next few years, though not forever. It trades at 8.51 times earnings and offers a 3.75% dividend yield. So, if you think there’s an opportunity among TSX stocks during this downturn, then, by all means, keep an eye on CNQ stock.

Bombardier

Bombardier (TSX:BBD.B) has come around a fair bit since its stock merger a few months back. Shares of the company are still down by 9% year to date. But they’ve surged in recent months, climbing a whopping 95% since July!

Yet now, Bombardier stock looks to be in overbought territory with an RSI at 74. The growth comes from new business jets coming on the market coupled with estimate-beating earnings reports quarter after quarter. Even so, it’s unclear how much growth can happen before investors start to question whether they should keep holding the stock, especially as the company’s balance sheet still needs some work.

Even so, if you’re looking for growth, Bombardier stock still seems to be climbing. Plus, earnings are around the corner, and that could bring shares up even higher. Still, should it reach January 2022 levels, we may see a selloff.

Tourmaline Oil

Finally, the biggest winner of 2022 so far has been Tourmaline Oil (TSX:TOU) with shares up 107% year to date alone. Yet this can be a tricky one, as the stock still trades at just 10.6 times earnings, making it look like it could be of some value.

Why the rise? The company was on a hot streak, raising its dividend by 11%, making strong acquisitions and bringing in record cash flow. However, it seems that after this record cash flow, there was a peak point of energy prices. With prices back down to earth, we may start seeing more stabilizing.

Furthermore, long-term Tourmaline stock is just another oil and gas stock that will have to adapt to a renewable energy future. For now, it’s locked solely to oil and gas. And that gives is a poor long-term sentiment — especially at these prices.

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 Amy Legate-Wolfe has positions in BOMBARDIER INC., CL. B, SV. The Motley Fool recommends CDN NATURAL RES. The Motley Fool has a disclosure policy.

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