The Toronto Stock Exchange welcomed the new year on a positive note. The TSX Composite Index climbed 1% in the first week of January. As the year unfolds, it is time to rebalance your portfolio to cash in on the stocks that have outgrown and become overvalued and invest in those with significant growth opportunities. In layman’s terms, it is time to sell the rally and buy the dip.
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Upcoming events in 2025
We will not try to predict 2025 as many moving pieces could significantly alter the forecast. Firstly, the upcoming policies by U.S. president-elect Donald Trump around import tariffs, corporate taxes, and immigrants could alter the course of some sectors. Political uncertainty in Canada could leave the growth stocks, which depend on economic growth, vulnerable to uncertainty. These events will impact the interest rate decisions of the central banks.
All these macro events could have a positive or negative impact on household spending. Now is the time to rebalance your portfolio.
Three stocks to sell the rally
Enbridge (TSX: ENB) is trading near its multi-year high above $64 for many reasons. It has added three U.S. gas utilities to its portfolio, and winter season demand has pushed this range-bound stock to its high. Although it is a good long-term stock, a price above $60 is unsustainable. You could consider selling a small portion of your Enbridge shares, which you might have bought at an average price of around $50, to take advantage of the momentum rally. You can buy them when the price falls below $50 in mid-2025.
Similarly, you could consider selling Shopify stock, trading at its seasonal peak of above $157. This level is unsustainable, and the stock could fall in February if the central bank decides to slow interest rate cuts.
Air Canada is another seasonal stock trading at an unsustainable level of above $22. It is time to sell the rally before the price dips as the holiday season travel ends.
Three stocks to buy the dip
The profits you make from selling the above stocks can be reinvested in stocks trading near their lows and have the potential to outperform in uncertainty.
Hive stock
Hive Digital Technologies (TSXV:HIVE) will benefit from a rally in Bitcoin price as it has a strong Bitcoin inventory. The market expects crypto to gain recognition under the Trump presidency and Elon Musk’s influence on policy decisions. A reduction in corporate taxes and immigration could promote domestic jobs and increase consumer’s buying power. More money in the market could drive investments in Bitcoin.
Hive is a range-bound stock trading between $4-$8. The stock has just begun to gather momentum. It could break its $8 upper range and make a new high amid optimism around crypto. A strong sign of Bitcoin acceptance and optimism is the launch of BlackRock’s iShares Bitcoin Trust.
Barrick Gold
Barrick Gold (TSX: ABX) stock has dipped 20% in the last quarter of 2024 as falling interest rates increased liquidity. The mining company’s stock is a good way to take advantage of the gold price fluctuation as its stock price fluctuates more than the gold price. The import tariffs and the risk of another trade war under the Donald Trump presidency could encourage central banks worldwide to increase their gold reserves.
Now is a good time to buy gold stocks at the dip and take advantage of the geopolitical uncertainty. It may be the best stock to own for the long term, as the mining company is seeing an increase in debt. Hence, invest only a small portion of your portfolio in this stock to make short-term opportunistic gains.
BCE
BCE (TSX: BCE) could be 2025’s turnaround story as it realizes the benefits of restructuring. It will see the impact of lower operating expenses and increased focus on high-margin, high-growth businesses like digital ads, cloud, and network security. Once the business restructuring is complete, the company could focus on reducing its balance sheet debt to reduce interest expenses. This dividend stock could be a growth stock for the coming two years, riding a recovery rally.
