The Motley Fool

3 stocks to buy and 1 to avoid

Successful investing isn’t just about picking winners; it is also about avoiding losers. To understand the significant effect a losing stock can have on your portfolio, consider this…

If you purchase a stock and it subsequently falls by 50%, you will need to achieve a 100% gain in price just to get back to break even!

A recent Research Wrap by broker CommSec has highlighted three stocks it believes could be winners, importantly the report also identified a stock which could turn out to be a loser.

Here are the three stocks that CommSec has recommended investors be “overweight”

Rail freight operator Aurizon Holdings Ltd (ASX: AZJ) could see an improvement in the tariffs it charges to customers in coming years. CommSec has set a target price of $5.45 on the stock, which provides upside to the recent close of $4.61.

According to CommSec Aristocrat Leisure Limited (ASX: ALL) is boosting its market share and enjoying positive momentum particularly in Macau. The broker has a share price target of $6.44, which compares favourably with the stock’s recent price of $5.90.

At $3.26 building materials supplier CSR Limited (ASX: CSR) has 22% upside to CommSec’s target price of $4.05. According to the broker, momentum in the housing sector remains positive and CSR is their preferred play on the sector.

Meanwhile, this stock has received an “avoid” recommendation

News last week that private equity interest in Treasury Wine Estates Ltd (ASX: TWE) had been quashed led to the stock price sinking 15% to $4.18. According to CommSec, investors shouldn’t anchor their thinking to the touted $5.20 price tag being initially offered by bidders with the broker slapping a target price of just $3.05 on the wine maker.

5 stocks under $5

We hear it over and over from investors, "I wish I had bought Altium or Afterpay when they were first recommended by The Motley Fool. I'd be sitting on a gold mine!" And it's true.

And while Altium and Afterpay have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $5 a share!

*Extreme Opportunities returns as of June 5th 2020

Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned in this article.

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