Brian Madden’s Top Picks for October 24, 2025

Brian Madden, Chief Investment Officer, First Avenue Investment Counsel

Focus: North American equities

Top picks: MDA Space, Waste Management, Allied Properties REIT

MARKET OUTLOOK:

Now nearly four weeks in, the U.S. government shutdown is proving to be largely a non-event for equity investors.

Not surprisingly, considering the truism that despite all the drama and political theatre, 100 per cent of government shutdowns end with government re-openings, investors have shifted their focus to companies third quarter profits.

Thus far, about 1/5th of S&P 500 companies have reported results, including most of the large banks, a number of industrial and consumer businesses and several technology and communications companies. Most of the so-called Magnificent 7, excluding Tesla and Nvidia report results next week, and will no doubt capture investors attention, with expectations and valuations generally elevated and with the group collectively comprising 34 per cent of the S&P 500 index weight.

In Canada, investors are awaiting - with great anticipation - the Nov. 4 federal budget. Private sector economists are steeling investors for a ballooning in the federal deficit – to a figure approximating $80 to $100 billion – levels previously unseen outside of the COVID-19 era, albeit masked in some accounting gimmickry separating “operating” deficits from “investments in the future”.

We expect that a budget that delivers targeted relief to tariff affected businesses and households, that encourages productivity and prosperity enhancing investment while achieving efficiencies in the “business as usual” costs of running the government could alleviate pressure on the Bank of Canada to cut overnight rates, and could also lend support to the Canadian dollar, which has lagged its G10 peers in appreciating against the U.S. dollar year to date.

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TOP PICKS:

MDA Space (MDA TSX)

With 55 years of operating experience, MDA Space is a leading Canadian space technology company positioned to capitalize on the rapidly expanding $1.5 trillion global space economy, supported by secular growth from next-gen telecom satellite constellations and national defense modernization.

The company’s new Aurora digital satellite provides a competitive edge in cost-efficient high-volume production and as a result, MDA has an impressive order backlog of $4.8 billion, which has compounded at approximately 54 per cent annually since 2020.

Management guidance anticipates 25 to 30 per cent annual revenue growth over the next five years, driven by conversion of their $20 billion pipeline cultivated through longstanding corporate and government relationships.

Although the company’s Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) is poised to grow at a 22 per cent compound rate over the coming three years, the shares trade at a multiple of just under 12 times enterprise value to EBITDA, post the 37 per cent drawdown in September after losing a contract with Echostar - affording an excellent entry point for long term growth investors.

Waste Management (WM NYSE)

Waste Management is the industry leader in North American waste collection with operations spanning collection, disposal, recycling and specialty medical waste disposal.

Ownership of 262 landfills affords the company a wide competitive moat, and advantages it with lower disposal costs and greater pricing power in its collections business given the regulatory and environmental hurdles to permitting landfills.

Beyond landfills, the company’s controls 506 solid and medical waste transfer facilities, 18 medical waste incinerators and 105 recycling facilities across 49 states and six provinces.

In this stable, concentrated industry, Waste Management, in the core collections and disposal business has good visibility towards achieving its three year growth plan, which entails zero to one per cent volume growth and three to five per cent annualized pricing increases, supporting three to six per cent organic sales growth.

The smaller but faster growing medical waste disposal, recycling and sustainability (RNG) businesses combined with regular small scale mergers and acquisitions are expected to further bolster overall growth. Coupled with efficiencies and operating leverage, we anticipate EBITDA growth near 10 per cent and dividend growth at or above the historic 10 year compound growth rate of eight per cent over the coming three years.

Total shareholder returns have compounded at a 17.3 per cent pace over the past decade resounding proof of management’s competency in achieving their target growth algorithm and realizing upon the compelling investment opportunity, which we believe remains at hand. particularly now with the shares trading 10 per cent below recent highs.

Allied Properties REIT (AP-UN TSX)

Allied Properties is an office and retail landlord, best known for gentrifying the former industrial and warehouse corridor along King Street and Front Street in Toronto, and more recently building the iconic The Well retail/office/residential complex nearby. It also has over five million square feet of space in Montreal and another three million across Vancouver, Calgary, and Kitchener.

The shares are former darlings, having compounded at a 17 per cent annual rate from the 2003 initial public offering (IPO) to the pre-COVID days but now trade at 0.5 times book value and 70 per cent of their pre-COVID highs, despite ample precedent in the private market for buildings to trade at book value and portfolios of buildings to trade at 0.65 times to 0.7 times book value in a full privatization scenario.

The 9.7 per cent yield, we believe, is sustainable, even in a more stressed occupancy scenario - which we don’t expect.

This is a deep value, turnaround situation with a wide margin of safety and with catalysts looming including: a forecasted improvement in occupancy, particularly as large employers like the big banks and the provincial government now mandate a four to five day return to the office, de-leveraging via non-core asset sales, and debt refinancing opportunities as construction financing is replaced with secured Canada Mortgage and Housing Corporation (CMHC) loans and a macro tailwind from falling interest rates.

PAST PICKS: OCTOBER 20, 2024

TFI International (TFII TSX)

Then: $189.95

Now: $125.35

Return: -34%

Total Return: -33%

Broadcom (AVGO NASD)

Then: US$179.89

Now: US$354.18

Return: 97%

Total Return: 98%

Couche-Tard (ATD TSX)

Then: $73.73

Now: $73.25

Return: -0.65%

Total Return: 0.41%

Total Return Average: 22%