Are you feeling the FOMO of the recent moves in the stock market? It seems everyone you know is making a killing, and you’re tired of sitting on the sidelines. With Canadian stocks trading at a deep discount to US markets, 2025 presents value buying opportunity for investors.
But what do you buy? With over 1,800 companies in the TSX, it feels like picking a winner is like finding a needle in a haystack. Sure, you could buy the BMO S&P/TSX Capped Composite Index ETF, but what’s the point of average growth when you can make outsized gains picking individual stocks?
What’s the secret to picking winning stocks?
We’re going to answer that question for you and present a surefire strategy to help you choose winners that bank big profits for your account in 2025.
Fundamental and Technical Analysis – The Foundation of Great Canadian Stock Picks
The top traders in the market—we’re talking about the pros working at hedge funds and banks—use a combination approach to conducting due diligence on stocks.
What does that mean?
The best traders don’t just look at the screen and pick whatever’s moving, they develop a strategy based on two DD components—fundamental and technical analysis. Let’s look at how traders use them to make winning stock picks.
Conduct Due Diligence with Fundamental Analysis
Whether a stock’s price rises or falls largely depends on the companies “fundamentals.” Traders look at specific elements of a company’s financial performance to assess whether it offers value or its just riding growth trends in the market.
Key Metrics in Fundamental Analysis
Traders will look at the company’s financial statements and earnings reports and take into account the following metrics when deciding whether or not to buy shares.
- Earnings Per Share (EPS) Measure profitability.
- Price-to-Earnings Ratio (P/E) Determines value.
- Return on Equity (ROE) Assesses efficiency.
- Debt-to-Equity Ratio Shows financial stability.
- Free Cash Flow (FCF) Evaluates Financial Strength.
These five metrics give a 30,000-foot view of the company’s financial performance and fiscal health. For many traders, fundamentals are enough to get them to pull the buy trigger.
Pay Attention to Earnings Reports
Earnings are the prime FA indicator traders use to assess company performance and growth potential. Names listed on the TSX report earnings every quarter, and give guidance on the company’s financial performance and operations projections for the following quarter.
Earnings season offers prime buying opportunities if you know what you’re looking for. But the real pros mix their fundamental analysis with technical analysis to get a clearer view of expectations and solidify their DD to give them the conviction they need to place the trade.
How to Spot Buy and Sell Signals with Technical Analysis
Technical analysis involves identifying patterns in the charts to predict what will happen next. If you’re a long-term value investor, chart analysis doesn’t really add much to your buying decision—you’ll be focusing on long-term earnings trends.
But if you’re a short-term investor looking for plays with time horizons of a few weeks or months, TA can offer more depth to your perspective, and more value to your DD process.
What Chart Patterns Reveal About Coming Moves
To figure out what happens next—look left on the charts. Skilled technicians will look for patterns like ABC’s, cup-and-handles, rising and falling edges, and many, many more to get an idea of what price action will do next. They’ll mark critical levels on the charts where price reacted or experienced an imbalance, giving them signals to enter or exit trades.
TA allows you to analyze the charts to an extent where you can spot setups happening in real time, and set alerts to enter trades as they meet your entry criteria set by your buying strategy.
How to Use RSI, MACD, and Bollinger Bands for Entry and Exit Signals
Reading raw price action is challenging. It took professionals like Tom Hougaard years of staring at the charts to get to a point where they could identify price action to an extent where they could use price alone to provide a reason for entry.
But most traders will add “indicators” like the RSI, MACD, and Bollinger Bands to give them more clarity on expected movements in price action. For instance, if the MACD is rolling over from bearish to bullish on the daily chart, the RSI is showing oversold conditions, and the Bollinger Bands are starting to expand, it’s a sign that momentum is changing, and we could see price move up.
In that scenario, if the company’s earnings report comes out positive, and the charts show the next resistance level is far above where price is currently, it’s a prime time to buy the name and ride the momentum to profit.
Becoming Skilled in Technical and Fundamental Analysis
We’ve shown you the basics of analyzing earnings reports and moves in the charts, and if there’s one mistake we’ve made, it’s probably convincing you that you’ve got what it takes to use TA and the fundamentals to pick winners in the market. But you’ll soon find that identifying patterns and learning how to incorporate mechanics like options expiry leave your head spinning.
The reality is this—it takes years to get your “eye in” on the charts to the point where you can identify breakouts or pending crashes in price. It takes years of reading balance sheets and financial statements to understand how to assess growth and identify value.
If you have a life filled with responsibilities, it’s going to be a long time before you master these skills to the point where you start seeing results in your trading account. But what if there was a way to leverage the knowledge of the pros and follow them along for the ride to profitability?
How to Pick Canadian Stocks Like a Pro with No TA or FA Skills
Great news. You don’t need to master TA and the fundamentals to make money in the Canadian stock market. With Stocktrades.ca, you get access to the best analysis in the industry, and the chance to follow the plays of the best traders in the market. You don’t need the knowledge and skillset to realize outsized gains, you need the right team supporting your trading decisions, and that’s what Stocktrades.ca brings to the table in 2025.
