Most investors live by the old axiom of “buying low and selling high.”
One of the easiest ways to go about this is to look for stocks to buy that are trading at their 52-week lows, while also looking to sell out of winning positions as the shares in your company approach their 52-week highs.
Here are three stocks that I don’t currently own positions in, but if I did, I would seriously be considering closing out on them.
Canada Goose Holdings (TSX:GOOS)(NYSE:GOOS) is an interesting candidate because the company has actually performed extremely well as of late.
In its first quarter ended on June 30 of the current fiscal year, GOOS reported top-line revenue growth of 58.5% to $44.7 million for the quarter, including tremendous growth in its direct-to-consumer or e-commerce channel, where sales increased to $23.2 million in the quarter from $8.3 million a year ago.
The maker of premium winter outerwear still recorded a loss for the quarter, which was roughly in line with the year-ago period but most of that has to do with the company’s plans to aggressively reinvest in the business, as it continues with its plans for international expansion.
While I still think still has a solid shot to grow over the long term, the fact that the shares have run up by over 96% so far this year gives me a bit of the “goosebumps” (pun intended) that it may not take much to send the shares lower on even a smidge of bad news.
GOOS is set to report earnings on November 14 before the markets open, and this would be one that I would watch carefully if I were holding an open position in the shares.
Canadian Pacific Railway (TSX:CP)(NYSE:CP) is another stock that has defied gravity as of late, thanks in large part to its former CEO, Hunter Harrison, who did a remarkable job of turning around the troubled railway operator over the past decade or so.
Yet the reality is that rail stocks are not a relatively fast-moving business, and the fact that CP’s stock price has risen nearly 1,000% since 2009 might suggest it’s time to at least trim some of the position.
Canadian National Railway, meanwhile, has lagged the performance of CP over the past decade.
One might wonder if CNR has some catching up to do.
At the same time, if you were holding a more skeptical outlook for the markets right now, one could probably make the case that if the market were to experience a temporary setback, it would likely be the CP stock rather than the CNR stock, which would have further to fall.
Bottom line
Now let’s not get it twisted here, folks.
I’m not suggesting for a moment that either of these two companies wouldn’t make fine long-term holdings in either your TFSA or RRSP accounts.
I’m simply suggesting that for the more active investor who likes to turn their portfolio over on a more regular basis, these are two stocks that might be high up on my “trim” list.
Meanwhile, if you’re a long-term buy-and-hold investor and you still like the long-term outlooks for these two companies, maybe you’d be better off buying on the next spell of short-term weakness, rather than adding to your position right at this moment.
Fool on.
Fool contributor Jason Phillips has no position in any of the stocks mentioned. David Gardner owns shares of Canadian National Railway. The Motley Fool owns shares of Canadian National Railway. Canadian National Railway is a recommendation of Stock Advisor Canada.