Ernest Wong, Head of Research and Portfolio Manager, Baskin Wealth Management
Focus: North American large caps
Top Picks: Stryker, MSCI, Waste Connections
MARKET OUTLOOK:
Most companies have reported first quarter earnings, and earnings and outlooks have remained resilient despite Iran and high energy prices, even as markets react quickly to Middle East developments.
The S&P 500 and Nasdaq are at record levels, but the rebound in April has largely been driven by companies related to artificial intelligence (AI), especially data centre suppliers. The top 20 performers on the S&P 500 this year are all AI-related suppliers like Sandisk, Intel, Micron, and Corning. Consumer spending remains K-shaped where the wealthy are spending while the low-end consumer continues to struggle. Given the bifurcated market, we see good opportunities for investors to buy high-quality companies at attractive valuations.
In Canada, the Toronto Stock Exchange (TSX) is much more weighed to financials and commodities. The Middle East conflict will likely benefit Canada in the long-run as countries look to alternative, stable suppliers of oil and gas, fertilizer, and chemicals. We expect near-term volatility over the next few months as Canada and the United States begin the renegotiation of the Canada-United States-Mexico Agreement (CUSMA).
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TOP PICKS:
Stryker (SYK NYSE)
Stryker is a provider of orthopedics and medical equipment. Stryker has leadership positions in fast-growing areas of medical technology including joint replacement and has gained market share from competitors Zimmer Biomet and Johnson & Johnson from launching new products, robotics, and a strong and effective sales force.
Shares have fallen with most of medical technology and from a cybersecurity incident this year, but we think Stryker can grow sales at nine to 10 per cent going forward. Shares are attractively valued at under 20 times consensus earnings.
MSCI (MSCI NYSE)
MSCI is the leading provider of international indices like the MSCI All-World Index, which are licensed to mutual funds, banks, and exchange-traded funds (ETFs) for benchmarking and analytics. This is a high-quality, high-margin business that benefits from the growth of ETFs and recently, from increased investor interest in international markets.
Shares have been weak over the last few years, partly in sympathy with other data-services companies due to worries about AI and a slowdown in their environmental, social, and governance (ESG) segment. We think MSCI can continue to grow both sales and profits at double-digits, and both the company and the chief executive officer (CEO) are aggressively buying stock. This is an opportunity to buy a very high-quality business at a multi-year low valuation.
Waste Connections (WCN TSX)
Waste Connections is one of the largest waste management companies in North America with a focus on smaller markets and vertically-integrated markets, leading to higher margins. It is a very well-run company, with a strong focus on employee retention and safety in a difficult industry, and a good track record of completing mergers and acquisitions (M&A). Shares have been weak this year, and the company has taken advantage by repurchasing stock.
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| SYK NYSE | Y | N | Y |
| MSCI NYSE | Y | N | Y |
| WCN TSX | Y | N | Y |
PAST PICKS: FEB. 24, 2026
Netflix (NFLX NASD)
Then: US$78.04
Now: US$87.03
Return: 11%
Total Return: 11%
Domino’s Pizza (DPZ NYSE)
Then: US$414.20
Now: US$321.86
Return: -22%
Total Return: -22%
Live Nation (LYV NYSE)
Then: US$157.98
Now: US$161.30
Return: 2%
Total Return: 2%
Total Return Average: -3%
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| NFLX NASDAQ | Y | N | Y |
| DPZ NYSE | Y | N | Y |
| LYV NYSE | Y | N | Y |
