Rebecca Teltscher’s Top Picks for September 3, 2025

Rebecca Teltscher, Portfolio Manager, Newhaven Asset Management

Focus: Canadian stocks

Top picks: Pembina Pipeline, Canadian Aviation Electronics, Northland Power

MARKET OUTLOOK:

Despite the stock market reaching all-time highs, we remain cautious in our outlook, recognizing that current valuations are heavily influenced by policy expectations rather than fundamental economic strength.

Markets are increasingly driven by the anticipated actions of the U.S. Federal Reserve, with widespread consensus pointing to a potential rate cut in September. In this unusual environment, negative economic data is often interpreted positively by investors, as signs of a slowing economy could prompt the Fed to ease monetary policy sooner. However, we expect volatility to rise in the second half of the year, driven by heightened political uncertainty, ongoing trade tensions, and the broader disconnect between market performance and underlying economic conditions.

We remain cautious and continue to invest in more conservative areas of the market and prefer to collect dividends up front instead of relying solely on market appreciation for our returns.

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TOP PICKS:

Pembina Pipelines (PPL TSX)

With a yield of 5.5 per cent, Pembina Pipelines offers the perfect combination of dividend yield, dividend growth and capital appreciation potential. The dividend yield is supported by long-term, fee-based contracts and take-or-pay agreements creating reliable and stable cash flows.

Pembina also has a strong history of project execution which is expected to continue with current capex projects such as the Cedar LNG expected to be in-service in 2028. Despite their superior positioning in the Western Canadian Sedimentary Basin, Pembina’s stock price has remained flat this year and valuations remain attractive.

Canadian Aviation Electronics (CAE TSX)

Canadian Aviation Electronics is down more than nine per cent since releasing its quarterly earnings which we view as a buying opportunity for new clients. Despite guidance getting lowered on the civil side in the short term, secular trends continue to be positive.

The ongoing pilot shortage should result in over 250,000 new pilots getting trained on flight simulators by 2029. In addition, CAE has exposure to the defense side, a once struggling sector that is now trending positive as well. This summer, Canada announced a significant increase in defense spending in order to align with NATO’s goal of five per cent of annual GDP by 2025. While macroeconomic uncertainty remains a risk for the aviation industry, we believe an underlying longer term opportunity exists and any short term weakness is a good buying opportunity.

Northland Power (NPI TSX)

While markets tend to react sharply to short term results, we believe this overlooks a company’s strong long-term fundamentals. Northland Power’s stock fell more than six per cent when it released its earnings due to weaker than expected wind resources.

The temporary underperformance was due to factors beyond management’s control; however, the stock quickly revered as investors recognized the strength of what management can control: operational execution and capital discipline. The Oneida battery storage project was completed early and under budget earlier this year, first power has been achieved at Hai Long in Taiwan and turbine installation is progressing at Baltic Power offshore in Poland.

Once these large offshore wind projects are completed in 2027, Northland Power’s earnings before interest, taxes, depreciation, and amortization (EBITDA) is expected to increase by almost 50 per cent. We believe this growth is not fully priced into the stock and as management continues to achieve key milestones, future value will get unlocked.

Past Picks: September 5, 2024

Brookfield Renewable Partners (BEP-U TSX)

Then: $33.65

Now: $34.29

Return: 2%

Total Return: 8%

TC Energy (TRP TSX)

Then: $63.23

Now: $71.31

Return: 24%

Total Return: 30%

Telus (T TSX)

Then: $22.71

Now: $22.56

Return: -0.6%

Total Return: 7%

Total Return Average: 15%