Stan Wong, Portfolio Manager at Scotia Wealth Management
Focus: North American Large Caps & ETFs
Top picks: BHP Group, GE Vernova, Vanguard International High Dividend Yield ETF
MARKET OUTLOOK:
With 2026 now well underway, equity markets remain on a constructive backdrop as moderating inflation, resilient corporate profits, and steady U.S. economic growth continue to support risk assets.
Recent U.S. data reflects underlying resilience, with consumer spending firm and the labour market stable. Market leadership has also begun to broaden beyond a narrow group of mega-cap stocks, with stronger participation across cyclical sectors supporting a healthier market structure. At the same time, relative valuations and stabilizing earnings trends are making international and emerging markets increasingly attractive as earnings revisions improve and a less dominant U.S. dollar supports the outlook for non-U.S. assets.
S&P 500 EPS growth is expected to remain solid in 2026, with forecasts pointing to approximately 13 per cent growth, supported by continued investment in artificial intelligence, digital infrastructure, electrification, and global industrial demand.
Investor focus is increasingly shifting toward consistent earnings delivery and cash-flow durability. Market performance in January was constructive, with the ‘January Barometer’ historically aligning with positive full-year outcomes when the month finishes higher (the S&P 500 rose approximately 1.4 per cent in January).
While volatility remains likely amid shifting monetary policy, CUSMA renegotiations, and U.S. midterm elections, the underlying economic backdrop remains supportive. Inflation continues to move toward target levels, labour markets remain stable, and nearly US$7.8 trillion in money-market assets represents a meaningful pool of potential demand as investors gradually redeploy capital.
At The Stan Wong Group, we focus on high-quality large-cap equities alongside government and investment-grade bonds. Our data-driven, diversified, and valuation-disciplined approach emphasizes durable cash flow, competitive strength, and viable earnings growth, integrated within each client’s broader financial plan to help maintain portfolio alignment and risk control through changing market conditions.
- Market-moving news, fast: Get the BNN Bloomberg App now
- Sign up for the Market Call Top Picks newsletter at bnnbloomberg.ca/subscribe
TOP PICKS:
BHP Group (BHP NYSE)
BHP is an Australian-based large-cap global mining company and one of the world’s largest diversified producers of essential commodities. We view the company as a direct beneficiary of rising demand tied to electrification, infrastructure investment, and AI-driven power and data center expansion.
It’s portfolio of iron ore, copper, and metallurgical coal assets underpins global industrial activity, while copper has become central to the investment thesis. Industry estimates suggest global copper demand could double over the next decade as electrification and grid investment accelerate. At the same time, structural supply constraints, declining ore grades, and years of underinvestment are colliding with accelerating demand for electrification, grid expansion, and power infrastructure supporting artificial intelligence. BHP’s scale and long-life copper assets position it well to benefit from what appears to be a sustained supply deficit later this decade. The company is expected to generate approximately US$55 billion in revenue for fiscal 2026.
Iron ore continues to generate substantial cash flow despite cyclical fluctuations, with BHP’s low-cost operations providing margin resilience even during softer pricing environments. This supports disciplined capital allocation, consistent shareholder returns, and reinvestment into future-facing commodities, while the company’s strong balance sheet provides flexibility through commodity cycles. Management has also demonstrated improved capital discipline, emphasizing high-return projects rather than pursuing volume growth alone.
From a long-term perspective, BHP offers exposure to global growth, inflation-sensitive assets, and hard-asset scarcity themes within a diversified mining platform. Near term, improving global manufacturing sentiment, stabilization in China’s policy backdrop, and continued strength in copper pricing provide potential catalysts, while strong free cash flow and shareholder returns help support downside resilience during commodity volatility.
GE Vernova (GEV NYSE)
GE Vernova is a large-cap global energy technology company focused on power generation, grid infrastructure, and electrification solutions, and we view the company as well positioned to benefit from rising global electricity demand. The company produces gas and steam turbines used in power generation, wind turbines for renewable energy projects, and grid technologies such as transformers, substations, and automation systems that help transmit and stabilize electricity.
Today, roughly one-quarter of the world’s electricity is generated using GE Vernova technology, highlighting its scale and installed base advantage. Electrification, industrial reshoring, and expanding AI-driven data centers are driving investment in power generation and transmission infrastructure, areas where GE Vernova maintains strong market positions. The company is expected to generate fiscal 2026 revenue of over US$44 billion.
A key element of the investment thesis is grid modernization and power reliability. Rising electricity demand is increasing baseload requirements, supporting continued demand for high-efficiency natural gas generation alongside renewable expansion.
GE Vernova’s large installed base supports recurring service revenue and improving earnings visibility. The company also maintains an order backlog of approximately US$150 billion and recently doubled its quarterly dividend to $0.50 per share while expanding its share repurchase authorization to US$10 billion, signaling confidence in cash flow generation and balance sheet strength.
From a long-term perspective, GE Vernova offers exposure to structural growth tied to rising electricity demand and energy transition investment. Near term, backlog conversion, improving execution, and accelerating capital spending tied to data center power demand and grid investment provide catalysts supporting continued earnings momentum and investor interest.
Vanguard International High Dividend Yield ETF (VYMI NASD)
The Vanguard International High Dividend Yield ETF (VYMI) provides exposure to large-cap, dividend-paying companies outside the United States, and we view the strategy as an attractive way to gain international equity exposure as market leadership broadens beyond U.S. mega-cap technology stocks.
The ETF invests across developed and select emerging markets in sectors such as financials, energy, healthcare, and consumer staples, offering geographic diversification alongside income generation. With a low expense ratio of 0.07 per cent and a dividend yield of approximately 3.8 per cent, VYMI provides a cost-efficient approach to accessing global dividend-paying equities. Top holdings include globally established companies such as HSBC, Novartis, Nestlé, Toyota, and Shell.
A key component of the investment case is the combination of income generation and valuation support. Many international markets continue to trade at discounts to U.S. equities on both earnings and book value measures, while dividend-paying companies tend to exhibit stronger balance sheets and more disciplined capital allocation. The strategy offers exposure to a stabilizing global growth environment, commodity-linked economies, and established companies with durable cash flows and consistent dividend profiles. For Canadian investors, it also provides important geographic diversification beyond North American markets at a time when global investors are increasingly broadening allocations toward non-U.S. equities.
| Disclosure: | Personal | Family | Portfolio/Fund |
|---|---|---|---|
| BHP NYSE | Y | Y | Y |
| GEV NYSE | Y | Y | Y |
| VYMI NASD | Y | Y | Y |
PAST PICKS: FEB. 6, 2025
Apple (AAPL NASD)
Then: US$233.22
Now: US$271.78
Return: 16%
Total Return: 17%
Deckers Outdoor (DECK NASD)
Then: US$172.19
Now: US$117.91
Return: -31%
Total Return: -31%
Financial Select Sector SPDR (XLF)
Then: US$52.11
Now: US$52.92
Return: 2%
Total Return: 3%
Total Return Average: -4%
| Disclosure: | Personal | Family | Portfolio/Fund |
|---|---|---|---|
| AAPL NASD | Y | Y | Y |
| DECK NASD | N | N | N |
| XLF NYSEARCA | Y | Y | Y |
