2 Stocks I’d Buy in 2024 (And 1 I’d Avoid!)

Are you looking for growth in a recovering market? Then it could be time to get out of these stocks and consider another instead.

| More on:
calculate and analyze stock

Image source: Getty Images

The TSX today is starting to shift. Already, shares have climbed past the all-time high. And yet, it’s not just in Canada. Around the world major indexes are seeing a climb past all-time highs. However, it’s not all good news for investors.

In fact, there are sectors that tend to start falling when the market recovers. So, let’s get into some stocks you may want to start avoiding, for now at least, and one that should start climbing back once more.

Gold stocks

During downturns, gold and precious metal assets are often viewed as safe havens during times of economic uncertainty. When the market begins to recover and confidence returns, the demand for precious metals typically decreases, leading to lower prices. Gold, in particular, is bought as a hedge against inflation and currency devaluation.

Instead, investors want to withdraw their cash during a recovery and put it towards higher-earning growth stocks. Perhaps now is the time to avoid gold stocks such as Barrick Gold (TSX:ABX). Barrick Gold is one of the largest gold mining companies in the world, with operations spanning several countries. Because of this, it’s very exposed. 

As a major gold producer, Barrick’s stock price is highly correlated with the price of gold. During a market recovery, gold prices often decline as risk appetite increases, and investors shift to equities. Furthermore, while Barrick pays a dividend, its yield may not be as attractive compared to other sectors that offer higher growth prospects during a recovery.

Consumer staples

Another area where investors tend to hold out during a downturn is consumer staples. Companies in this sector produce essential products such as food, beverages, and household items. Like utilities, consumer staples are considered defensive stocks that provide steady returns during recessions. As the market recovers, investors may prefer to invest in consumer discretionary stocks that have higher growth potential.

One that I would consider avoiding first and foremost is Loblaw Companies (TSX:L). After all, the company is already facing a boycott due to higher prices, even though Loblaw is Canada’s largest food retailer and operates supermarkets, pharmacies, and other retail stores.

Beyond that, Loblaw stock’s business model provides essential goods with stable demand, but it typically offers lower growth potential compared to more cyclical sectors. During a recovery, investors may rotate out of stable, defensive stocks like Loblaw stock into sectors that benefit more from economic growth.

One to buy!

When the market is recovering however, it can be a great time to buy. But don’t just jump into stocks that are risky. Instead, consider stables stocks that should do well for the next decade, or at least until the next downturn. 

Banks and financial institutions tend to perform well during economic recoveries. As the economy improves, loan demand increases, interest rates may rise (which can boost net interest margins), and overall economic activity supports financial services.

In particular, Royal Bank of Canada (TSX:RY) is a solid option. The company stands to benefit from economic expansion. Increased economic activity leads to higher demand for banking services such as lending, wealth management, and capital markets activities, which can boost RBC’s revenue and earnings.

So, with shares now at all-time highs yet still trading at 13.41 times earnings and a dividend yield of 3.8%, it’s a great time to get back into the stock.

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 Royal Bank Of Canada. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

More on Stocks for Beginners

construction workers talk on the job site
Energy Stocks

Best Stock to Buy Right Now: Baytex vs Suncor?

Suncor and Baytex stocks both look like solid companies offering growth and dividends. But which is the better buy?

Read more »

profit rises over time
Top TSX Stocks

3 Reasons to Buy Enbridge Like There’s No Tomorrow

Have you considered buying Enbridge (TSX:ENB)? Here are 3 reasons to buy Enbridge today for lasting growth and income.

Read more »

An investor uses a tablet
Stocks for Beginners

If I Could Only Buy 2 Stocks in the Last Half of 2024, I’d Pick These

I’m looking to buy two stocks over the next month. Here’s a look at my picks and why you should…

Read more »

dividends grow over time
Stocks for Beginners

The Smartest Growth Stock to Buy With $2,000 Right Now

Do you have $2,000 to invest for the long term? These three TSX stocks have and will continue to deliver…

Read more »

The virtual button with the letters AI in a circle hovering above a keyboard, about to be clicked by a cursor.
Tech Stocks

Is OpenText Stock a Buy, Sell, or Hold for 2025?

OpenText stock has fallen in the last few years, but that could mean this top tech stock remains an undervalued…

Read more »

man touches brain to show a good idea
Dividend Stocks

3 No-Brainer REIT Stocks to Buy Right Now for Less Than $200

REITs have long been touted as some of the best dividend stocks out there if you want recurring, strong income.…

Read more »

grow money, wealth build
Dividend Stocks

3 Top High-Yield Stocks to Buy in November

If you want passive income, high yield dividend stocks are the clear choice. These are the best, and safest, out…

Read more »

Stocks for Beginners

Where will Loblaw Stock be in 5 Years?

Want a great food stock that can provide growth and income? Here's why Loblaw stock can offer that and more.

Read more »