2 TSX Stocks to Buy and 1 to Sell

In every market environment, there are always stocks investors are going to consider buying opportunities and ones they’d rather get rid of. The nature of markets is one that requires picking and choosing winners, and that’s what makes the game exciting.

The good news for Canadian investors is that the TSX is chock full of excellent growth and dividend stocks to buy. I’m usually focused on those. However, there are a few companies I think investors may want to be more cautious with right now.

With that in mind, here are two buys and a sell (at least in my view).

Buy: Toronto-Dominion Bank

In terms of large-cap Canadian bank stocks to buy, Toronto-Dominion Bank (TSX:TD) stands out as an excellent opportunity in my books.

There are a number of key reasons for this. First, TD trades at a dirt-cheap trailing price-to-earnings multiple of around 11 times, well below banking peers. To me, this signals deep value given the fact that a number of regulatory headwinds eased.

Additionally, the company’s fundamentals remain very robust. On a trailing 12-month basis, TD’s earnings per share (EPS) hit $9.64, with a forward dividend yield near 4.1% and a payout ratio under 95%. I think that provides sustainable upside for those looking for both capital appreciation and dividend growth (given the bank’s more than 30-year track record of dividend hikes).

As we see loan growth take off and net interest margins improve, there are plenty of catalysts for investors to look at as reasons to buy this name right now.

Buy: Fortis

Most investors who have read any of my work over the course of the past few years are aware of my very bullish views on Fortis (TSX:FTS).

Nothing has changed on this front.

This utility giant boasts a forward price-to-earnings ratio of 21-times. That’s very reasonable for its defensive profile and 3.3% dividend yield backed by decades of consecutive hikes.

With surging revenue over the past year (more than $8.7 billion) driving net income of $1.25 billion and solid EPS and profit margin expansion, this is a stock I think investors looking to benefit from the rise of AI (and surging electricity usage) may want to consider.

Sell: Constellation Software

One top Canadian growth stock I’m souring on of late (though I’ve been bullish in the past) is Constellation Software (TSX:CSU).

That’s unfortunate, considering the company’s scalable and replicable business model of acquiring small and medium-sized software companies over time has worked so well. However, as most investors are well aware, now is not the time to be growing one’s portfolio of software holdings (just look at the world of private credit).

With Constellation Software now giving up most of its gains for the past three years, this is a stock some may view as relatively undervalued from a historical perspective. I’m actually inclined to agree. However, the reality is that investors are looking past software names right now, and the trend has to be your friend.

Thus, I’m shifting my position on Constellation right now.

The post 2 TSX Stocks to Buy and 1 to Sell appeared first on The Motley Fool Canada.

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* Returns as of February 17th, 2026

More reading

• 5 Canadian Stocks to Hold for the Next Decade
• 1 Practically Perfect Canadian Stock Down 38% to Buy and Hold Forever
• 3 Canadian Bank Stocks That Could Outperform Global Peers Again in 2026 and 2027
• 5 TSX Dividend Stocks to Hold for the Next Decade
• Better Than Bonds? 3 Defensive Stocks to Consider When Volatility Picks Up

Fool contributor Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool recommends Constellation Software and Fortis. The Motley Fool has a disclosure policy.