Andrey Omelchak, Chief Executive Officer & Chief Investment Office, LionGuard Capital Management
Focus: North American small and mid-cap equities
Top Picks: Magellan Aerospace, Stingray Group, Black Diamond Group
MARKET OUTLOOK:
The market environment in 2026 has been affected by heightened volatility reflecting a combination of geopolitical developments and their impact on global growth, interest rates path and risk on risk off sentiment.
Markets today are increasingly driven by investment themes, which attract massive fund flows and create powerful momentum to the upside until said theme abates. For investors who recognize these dynamics and position accordingly, while staying true to fundamental principles, this creates a particularly compelling opportunity set.
For example, in Canada we are seeing the early stages of a “Build Canada” multi-year investment cycle, with increasing visibility into large-scale infrastructure, power, defence, and domestic capabilities projects. Defence spending especially is booming across Canada and allied nations, driving a sharp increase in bidding pipelines and contract opportunities across a range of businesses. Power shortage and other grid constraints, largely fuelled by massive data centers buildout, has been another powerful theme with structural tailwinds.
One of the most notable developments over the past nine months has been the large selloff across software-as-a-service (SaaS) and broader software businesses. After a violent period of multiple compression, valuations have reset meaningfully. We are now seeing signs of a bottoming process, with investors increasingly capable to distinguish between AI beneficiaries and structurally challenged businesses.
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TOP PICKS:
Magellan Aerospace (TSX: MAL)
In our view, one of the most underappreciated ways to invest in booming global defence cycle. The company sits at the center of mission-critical aerospace and defence supply chains, with deep relationships across major original equipment manufacturers and long-duration program exposure—yet remains undiscovered by institutional investors.
Defence budgets are booming across Canada, the U.S., and Europe, and Magellan is seeing a surge in activity, including large number of new request for proposals. We believe the company is a very likely recipient of major Canadian defence contract awards as national priorities shift toward domestic capability and security of supply.
At the same time, the earnings model is set up for significant operating leverage. As volumes ramp and mix improves, there is a clear path, in our opinion, to substantial margin expansion from current levels—driven by better capacity utilization, higher-value programs, and a largely fixed cost base.
Despite all of this, Magellan continues to trade at a meaningful discount to global aerospace and defence peers, many of which have already re-rated. As contract wins materialize and margins expand, we see path to both strong earnings growth and multiple expansion.
Stingray Group (TSX: RAY)
A business undergoing a very meaningful transformation, pivoting toward higher-growth, higher-margin digital advertising segments—yet remains largely undiscovered by investors outside of Quebec.
The story today is about multiple growth vectors inflecting at the same time. FAST channels, retail media, and in-car entertainment are now driving great majority of the business. This is leading to strong double-digit growth in its Broadcasting and Commercial Music segment, significant net income expansion, and improving margins across digital platforms.
In addition, recent TuneIn and DMI acquisitions are proving both strategic and highly accretive, unlocking cost and revenue synergies. With programmatic capabilities now in place, Stingray is sitting on substantial unmonetized inventory, and as fill rates improve, we see a clear path to accelerating revenue growth—particularly in FAST and retail media over the next 6–12 months.
There is also a very compelling longer-term catalyst in connected cars. With partnerships across major original equipment manufacturers like Tesla, Audi, BYD, and Nissan, we believe Stingray is well-positioned to benefit as the installed base of connected vehicles scales, with a more material financial impact expected into 2027.
Despite positive unfolding dynamics, the company currently trades at a double-digit free cash flow yield—creating, in our view, a compelling opportunity for both free cash flow per share growth and multiple expansion.
Black Diamond Group (TSX: BDI)
A direct beneficiary of the coming wave of large-scale infrastructure and “nation-building” projects across Canada.
The company operates across end markets where demand is clearly accelerating—including energy, mining, infrastructure, and increasingly defence-related projects. This is translating into a booming bidding pipeline, particularly within its Workforce Solutions (WFS) segment, which provides modular accommodation and services for large, remote projects.
The company owns a significant portion of Canada’s modular accommodation capacity, yet utilization remains relatively low. As large projects begin to advance, even modest increases in utilization should drive a disproportionately strong increase in revenue and free cash flow, with almost no incremental capital required.
In our view, only a small number of major project awards would be sufficient to absorb excess industry capacity and meaningfully tighten the market. As this unfolds, Black Diamond is well positioned to benefit from both higher utilization and very likely pricing upside.
Lastly, Black Diamond (BDI) is already a very strong free cash flow generator (with an attractive free cash flow yield), even before any real tightening in its end markets.
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| MAL TSX | N | N | Y |
| RAY TSX | N | N | Y |
| BDI TSX | N | N | Y |
PAST PICKS: SEPT. 16, 2025
Electrovaya (ELVA TSX)
Then: $8.22
Now: $13.37
Return: 63%
Total Return: 63%
TFI International (TFII TSX)
Then: $131.52
Now: $185.23
Return: 41%
Total Return: 42%
Mattr Corp (MATR TSX)
Then: $11.42
Now: $9.50
Return: -17%
Total Return: -17%
Total Return Average: 29%
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| ELVA TSX | N | N | Y |
| TFII TSX | N | N | N |
| MATR TSX | N | N | N |
