After an Earnings Miss, Investors Need to Stay Clear of Canadian Tire Corporation Limited (TSX:CTC.A)!

After missing earnings, shares of Canadian Tire Corporation Limited (TSX:CTC.A) remain one of the best bargains to avoid!

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

After falling close to 10%, shares of Canadian Tire (TSX:CTC.A) may finally be starting to look appealing to many investors. The caveat, however, is that momentum is a tough thing to break.

After finally crossing under the 200-day simple moving average, shares of the unique Canadian retailer may finally be taking a break from the incredible year that it has had so far. In spite of being the “go-to” place for many consumers in a lurch, the company should be avoided at all costs by investors.

Similar to AutoCanada (TSX:ACQ), which declined by more than 25% after an earnings miss last week, it is becoming more and more clear that investors are willing to punish any name that fails to meet expectations. What this really means for investors is that there are very exciting short-selling opportunities available in the market. As corporate profits fail to increase quarter over quarter, it is becoming extremely clear that the economy has peaked and will be heading into a recession within the next 12 months — maybe even sooner.

When comparing just how bad the news is between these two names, many naysayers will continue to gravitate towards Canadian Tire, as the company has been extremely resilient. In fact, it will probably be the last retailer standing. However, a receding tide will lower all boats (including this one). Instead, consider shares of AutoCanada, as the company is deeply cyclical and maintains a high amount of exposure in the province of Alberta.

As the price of oil continues to hold around the US$70 mark, the increase in employment is finally leading many consumers to replace old vehicles and buy new homes. Essentially, the focus on black gold will lead Alberta in a separate direction as the rest of the country — again!

For investors who prefer to go long the market, the solution is quite simple. For others, however, the goal may be to find the most vulnerable industries available and go short.

As I have written about in the past, the airline industry has traditionally been one of the easiest to turn south, as the commitments and fixed costs become very high as fewer passengers fly for recreational reasons. In fact, both business travel and consumer vacations are put on the back burner, as salaries are cut across the board. For many hourly workers, there is less overtime available, and for c-suite-level executives, compensation declines as stock options dry up and variable compensation is cut as a source of cost savings.

One of the main factors that will make this recession far different than the last is the government’s inability to cut interest rates more than a token amount, which will lead to a much lengthier downturn. Investors should become much more selective when it comes to stocks as we enter this market.

Should you invest $1,000 in Autocanada Inc. right now?

Before you buy stock in Autocanada Inc., consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Autocanada Inc. wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $18,391.46!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 35 percentage points since 2013*.

See the Top Stocks * Returns as of 1/7/25

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 Ryan Goldsman has no position in any of the stocks mentioned.

If You Thought Apple and Microsoft Were Big, You Need to Read This.

The steel industry produced the world's first $1 billion company in 1901, and it wasn't until 117 years later that technology giant Apple became the first-ever company to reach a $1 trillion valuation.

But what if I told you artificial intelligence (AI) is about to accelerate the pace of value creation? AI has the potential to produce several trillion-dollar companies in the future, and The Motley Fool is watching one very closely right now.

Don't fumble this potential wealth-building opportunity by navigating it alone. The Motley Fool has a proven track record of picking revolutionary growth stocks early, from Netflix to Amazon, so become a premium member today.

See the 'AI Supercycle' Stock

More on Investing

cryptocurrency, crypto, blockcahin
Tech Stocks

Earn an 11% Yield With This Bitcoin-Focused ETF

This ETF converts the high volatility of Bitcoin into above-average monthly income.

Read more »

The TFSA is a powerful savings vehicle for Canadians who are saving for retirement.
Investing

3 Canadian Stocks to Consider Adding to Your TFSA in 2025

These three Canadian stocks are excellent additions to your TFSA in this uncertain outlook.

Read more »

Dividend Stocks

The Underperformers: Canadian Stocks That Missed the Mark in 2024

I'm bullish on one of these dividend stocks but bearish on the other.

Read more »

TFSA (Tax free savings account) acronym on wooden cubes on the background of stacks of coins
Dividend Stocks

2 TSX Stocks to Invest $20,000 and Create $2,597.60 in Passive Income

Need income? We got you, with these two top dividend stocks due for more solid growth and passive income.

Read more »

money cash dividends
Dividend Stocks

Trump Tariffs: 1 TSX Stock That Could Take a Huge Hit

This TSX stock hopes to improve shareholder returns in 2025 but could take a huge hit instead from Trump’s tariffs.

Read more »

bulb idea thinking
Bank Stocks

Why Canadian Financial Stocks Remain Core Holdings for Smart Investors

Canadian financial stocks: stable, reliable, and growing. Discover why these market pillars remain essential for your 2025 portfolio strategy.

Read more »

Dividend Stocks

1 Canadian Stock Down 26% That’s Pure Long-Term Perfection

Canadian National Railway (TSX:CNR) is a prime example of a Dividend Aristocrat that merits consideration.

Read more »

A lake in the shape of a solar, wind and energy storage system in the middle of a lush forest as a metaphor for the concept of clean and organic renewable energy.
Dividend Stocks

Best Stock to Buy Right Now: Brookfield Renewable vs TransAlta Corporation?

Brookfield Renewable Partners (TSX:BEP.UN) is a massive player in renewables.

Read more »