Why the tsx is vulnerable to a major pullback

Sure, we all do, especially when those bargains come in the form of stocks that have gone "on sale" as a result of a sell-off. Not every name that takes a dip, however, is necessarily a bargain worth buying into.

Sometimes these stocks have sold off for good reason. These three names are all cheaper now than they were as of July, but are they actually worth stepping into at these lowered prices? In most months the market's biggest losers tend to illustrate a broader theme.

August, however, was an exception to this norm. All tumbled for relatively unique reasons that have to be examined on a case-by-case basis.

IPG Photonics' setback largely materialized in just one day -- the day it reported second-quarter numbers that fell short of top- and bottom-line estimates despite improving on a year-over-year basis. But, the crux of the pullback likely stemmed from the company's lackluster guidance for the quarter now underway.

Perrigo's August pullback also unfurled in one day, and like IPG's, that pullback came in response to its second-quarter earnings shortfall. The earnings miss, however, was for a most curious reason. In the world's effort to avoid contracting the coronavirus, people socially distancing are also catching fewer colds, crimping sales of Perrigo's cold and flu treatment products.

Finally, General Motors drifted lower over the course of last month. The numbers themselves are actually pretty solid. What the carmaker didn't do, however, is convince investors that its challenges caused by the worldwide chip shortage will abate anytime soon. Vulnerable and forgotten?

Canada scrambling for smaller syringes ahead of expected Pfizer vaccine label change. Ontario records lowest number of new COVID cases in more than two months with fewer than 1, infections. PM warns Canadians to expect more travel restrictions soon. Full coverage at CTVNews.

Sign up for our weekly email newsletter delving into climate science and life on a changing planet. Canadian National Railway shares dipped 4.

The Canadian dollar traded for This report by The Canadian Press was first published Jan. More Business Stories. Pattie Lovett-Reid: Key questions to ask before investing in cryptocurrency. Produce industry warns of potential shortages as supply chain issues mount. Roberge is particularly bullish on gold and base metals. With gold stocks, he recommends investors accumulate positions on a pullback stating, "[W]e believe the next 5 per cent dip should be bought for inflation-hedging purposes.

Turning to industrials, apparently, " could be a banner year for rail traffic. Consumer stocks fail to appeal to the analyst, noting their high valuations.

The analyst has "market weight" recommendation in the consumer discretionary sector, and an "underweight" recommendation in the consumer staples sector. Within the financial sector, insurance companies are the place to be invested in, trading at a discount relative to banks, "On a price-to-book value basis, the group is trading at a 30 per cent discount to banks".

He went on to note that insurance companies are a beneficiary of a rising bond yield environment. The analyst has a "market weight" recommendation on banks, suggesting that while they lack earnings growth, they offer investors attractive yields and trade at more compelling valuations relative to other defensive yielding securities.

Finally, industry challenges are hindering the upside potential for many asset managers, justifying his "market weight" recommendation on the group.

Roberge said, "Canadian households have reduced their saving rate over the past two quarters, a bad omen for net new sales of equity funds in Canada. Finally, both telecommunication and utility stocks are unattractive in his opinion due to high valuations.

For instance, he notes that the utilities group is "trading at a forward price-to-earnings multiple of 22 times, one standard deviation above its historical average. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe. If you would like to write a letter to the editor, please forward it to letters globeandmail.

Readers can also interact with The Globe on Facebook and Twitter. If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour. Industrials climbed 1. Shares of Canadian Pacific Railway Ltd. Meanwhile, the loonie slipped as Canada's economy had its worst quarterly stretch since the start of the pandemic, contracting at an annualized rate of 1.

Bangsund said she wouldn't be surprised if Tuesday's softness isn't the start of periodic bouts of volatility as investors digest COVID headlines and what that means for the economic recovery. She said some creeping concerns have not been reflected in earnings expectations, which have consistently been revised higher. The TSX was up nearly 1.