The TSX Is on Fire, But Should You Be Buying Right Now?

TSX just topped 30,000, but don’t panic; here’s how to stay invested smartly, manage risk, and five TSX stocks to consider for the long term.

Amy Legate-Wolfe

Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Before joining Motley Fool Canada, she wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband. Follow Amy on LinkedIn and Canada Stock Digest. Favorite Investment Quote: “October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published October 27, 2025 9:15 pm EDT

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Key Points

Stay invested during rallies by buying quality stocks incrementally, dollar-cost average and focus on long-term compounding.
Beware elevated valuations and sector concentration; prioritize value, diversification, and risk management over chasing momentum.
Consider TSX names like BNS, TELUS, Magna, CNQ, and Canadian Tire for income, value, and long-term growth.

It happened. The TSX today surged past 30,000 points and doesn’t seem as though it’s going to slow down. Yet this is when many investors might start to panic sell, bringing out their earnings instead of letting them rise. It’s important to remember: over time, the market rises. So, with that in mind, here is what investors should consider, and some investment options as a cherry on top.

rising arrow with flames — Source: Getty Images

What to watch

First, the bullish case is compelling. A number of tailwinds support the Canadian market, including commodities and energy, which help many TSX-listed companies. The banking and materials sectors are gaining momentum. Lower interest rates or expectations of cuts help corporate earnings and valuations for income-generating stocks. Second, if you’re a long-term investor, investing during a rally still puts you in the game of compounding. Market timing is difficult, so getting in incrementally and buying quality companies that can grow for decades often beats trying to wait for the “perfect dip.”

That said, there are several risks cropping up, which means buying everything now would be unwise. Valuations are elevated. A big part of the rally is already priced in, meaning gains from here may be more modest and susceptible to a pullback. The TSX is also heavy in banks, energy, and materials. When these sectors falter, the market could weaken faster than a diversified global index. And while Canadian companies may benefit from commodities, they also face global trade, currency, and inflation risks. A downturn in exports or a spike in interest rates could hit earnings and valuations. Go for value over trends and maintain diversification.

Canadian investors should absolutely continue buying stocks, especially if they have a long-term horizon and their investing goal is building wealth over decades. The market is up, yes, but that doesn’t invalidate the power of consistent contributions, reinvested dividends, and quality companies compounding returns. However, now is not the time for blind enthusiasm. The rally heightens the need for selectivity, discipline and risk management. So, let’s look at some strong options to consider.

Five top TSX stocks

With that in mind, let’s look at some of the best opportunities out there to get in on a rally while taking a long-term investment horizon into consideration. First, Bank of Nova Scotia (TSX:BNS) is an excellent option that looks undervalued. The Big Six bank has been steadily increasing its dividends, with a diversified international exposure available for investors. So, of all the banks, you could gain a stellar 4.85% dividend yield trading at just 11.5 times forward earnings.

Also consider the safety of telecom, with TELUS (TSX:T) being a stellar option. It’s a Dividend Knight that’s risen its dividend year after year, with quality growth from its TELUS Health and TELUS Digital arms. The company has a strong dividend growth record and solid long-term compound potential.

Another undervalued option looks like Magna International (TSX:MG), especially as a long-term hold. Despite recent weakness in share price, it’s provided record-setting earnings. The global auto-parts scale and diversified end markets all support its dividend income. It’s therefore a top choice for growth and income.

For energy, Canadian Natural Resources (TSX:CNQ) looks attractive, even in this strong market. Energy stocks often offer higher yields, and if global commodity demand remains strong, there could be further upside. CNQ remains one of the best performing in terms of dividends, earnings, and growth. So, it’s a top choice.

Finally, we have retail, with Canadian Tire (TSX:CTC.A): a safe and steady option. It’s also undervalued, with a well-known retail business offering diversified operations through retail, finance, and auto. Plus, its dividend and value growth potential appear to keep rising.

Bottom line

In short, don’t look at today’s market and think the growth is over, but don’t dive in either. Instead, stay the course and consider looking for safe, valuable options like these to keep your portfolio rising.