3 Rotten Shares to Sell, and 1 to Buy Today

After a double-digit rally for the S&P/TSX Composite since 2016 lows, investors should be on high alert.

Turns out the days of easy profits may have disappeared and investors could risk getting caught owning the wrong stocks at exactly the wrong time.

But which stocks are amongst the riskiest and where should investors be hunting for profits instead?

You’ll find a rundown below of 3 companies we think you should avoid today plus one top pick our team of analysts think is worth buying, even if the market turns south.

Bombardier (TSX:BBD.B)

When it comes to investing for the long-term, generally, steering clear of companies that have become reliant on government bail-outs to survive is a solid rule-of-thumb to follow. While Bombardier’s history runs deep in this country, this is exactly the position that the company is in. The province of Quebec has spent $1 billion on bailing them out already, and the Government of Canada could be next. Regardless, the company has proven itself to be a deplorable allocator of capital, and with the founding family still in charge, our team thinks there’s little reason to believe this will change. Financial risk remains significant, and even though elected officials appear keen for the exposure, we’re anything but. In our mind, Bombardier’s a no-fly zone.

Encana (TSX:ECA)

Strategy is a critical underlying fundamental when it comes to running a business, and we can think of no company that we believe has been more lost when it comes to strategy than Encana. First, the company cut loose its oil assets (which subsequently became Cenovus Energy) to focus exclusively on natural gas. Natural gas prices subsequently cratered to below $2.00/MMbtu. So, the company decided to get back into oil, which subsequently cratered, falling below $30/barrel earlier this year. This strategic flip-flopping has led to more than $10 billion in asset write-downs since 2012 and even though the company’s had some luck with asset sales (never a great sign), the team thinks the balance sheet remains questionable. There are better ways for your portfolio to gain energy exposure.


Our analysts think BCE doesn’t offer the same potential for disaster as the other two, however, that’s about the most positive thing we can think of to say about this Canadian behemoth. The Canadian telecom space is effectively saturated, meaning, where BCE, or its peers for that matter, are going to find growth in the years ahead is somewhat of a head scratcher to us. However, our analysis suggests the company trades at a valuation that suggests growth will exceed what’s occurred over the past decade. We disagree and will not be surprised if BCE’s annualized return over the next decade is below the current dividend yield offered.

1 Gangbuster Growth Stock to Buy Now

By comparison to these 3 potential disasters, there’s still one “under-the-radar” stock pick we think could soon deliver a boatload of profits for investors.

Not only is the stock trading nicely below its highs, the underlying business remains in its infancy, and is evolving at an incredible rate. We foresee that over the next 5-10 years, this company will prove to be the stock to own in the Canadian market, and we’re still very much on the ground floor — which makes it our gangbuster growth stock to buy NOW!

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