Tim Regan, Managing Director, Kingwest & Company
Focus: North American large caps
Top picks: Strathcona, Quebecor, Blackstone
MARKET OUTLOOK:
In Canada, the gold sector has accounted for almost one-third of the increase in the S&P/TSX Composite Index.
Gold is up over 50 per cent in 2025 year-to-date, the largest run since 1979. It is up 25 per cent since July 31st. Astounding! A rise like this has happened very few times in the past. In each case the following year, gold shares collapsed relative to the stock market. Not just by a little, by a lot!
Right now, the U.S. stock market loves growth, tech and volatility — only tech, communications and consumer discretionary companies have outperformed the relevant index. The other eight sectors have underperformed.
The U.S. experience differs dramatically from Canada. For the most part, high priced U.S. companies have built in very high expectations of future performance which have pushed the stock prices of these companies to rarified heights. That these expectations will be met is an extremely tough bet!
In the U.S. it is widely reported that the market is overvalued because the price-to-earnings ratio.
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TOP PICKS:
Strathcona (SCR TSX)
Strathcona Resources Ltd. Is a $9 billion company that acquires, explores, develops, and produces petroleum and natural gas reserves in Canada.
Strathcona is founder-led. Chairman Adam Waterous is focused on per share growth and narrowing the valuation gap. It has long life assets that cover sustaining capital costs at $40 oil, about 10 per cent organic production growth, levered to WCS. +/- 2.1 per cent cash flow for every $1 of WCS and is cheap.
About $60 in a few years once the float improves pushing ETFs/institutional investors into the stock.
Following failed MEG takeover, it intended $10/share dividend and is refocusing on growth. Strathcona reiterated its organic growth plan to 195 mb/d (~10 per cent CAGR), all of which would come from its thermal assets. It is increasing the float.
Approximately 13 per cent of SCR’s outstanding shares will be distributed in two stages to LPs, with around five per cent allocated in November 2025 and the remaining eight in early 2026.
As a result, WEF’s ownership stake will decrease to approximately 66.6 per cent. This will result in SCR’s public float nearly doubling to 33.3 per cent.
Quebecor (QBR.B TSX)
Quebecor Inc., based in Quebec operates in the telecommunications, media, and sports and entertainment businesses in Canada.
Quebecor is fourth part of the Telco oligopoly in Canada (Bell, Rogers and Telus being the others)
It is growing in an otherwise saturated wireless business through Freedom Mobile they have only an 11 per cent market share but are taking in a third of the new subscribers this year.
As the company has deleveraged rapidly in the last few years it has freed up more capital for share buybacks over the next few years
We see the company at $70 in the next three years with just under a three per cent dividend
Blackstone (BX NYSE)
Blackstone is the world’s largest alternative asset manager, with more than US$1 trillion in assets under management. It serves institutional and individual investors by building strong businesses that deliver lasting value. The scale – with 12,500+ real estate assets and 250+ portfolio companies - enables it to invest in dynamic sectors positioned for long-term growth.
It is down 25 per cent this year and is a great long- term opportunity.
Blackstone is a private equity, real estate and private credit manager with $1.2 trillion under Admin. It has a great management team.
About $500 billion is perpetual capital and $200 billion is dry powder or money waiting to be deployed. They have raised over $200 billion in the last 12 months and are expanding into retail.
They have a variable dividend, but it averages about four per cent year. We see the company trading at US$200 in the next two to three years
| Disclosure: | Personal | Family | Portfolio/Fund |
|---|---|---|---|
| SCR TSX | Y | Y | Y |
| QBR.B TSX | Y | Y | Y |
| BX NYSE | Y | Y | Y |
