David Burrows, Chairman and CEO, Barometer Capital Management Inc
Focus: North American large caps
Top Picks: Bombardier, BHP Group, Tamarack Valley Energy
MARKET OUTLOOK:
The team at Barometer continues to highlight that the current equity backdrop is a market of haves and have nots.
Roughly 50 per cent of stocks and sectors are showing strength while 50 per cent are showing significant relative weakness. It is a market for tactical stock pickers. It appears while there is a heavy concentration by investors in artificial intelligence (AI) related tech driven by the very aggressive buildout in infrastructure, there is also a clear leaning in relative performance to assets that benefit from or act as a hedge against inflation.
Given the typical weak seasonality between now and the mid-terms along with the narrow and more crowded nature of leadership in the market, the Barometer team is highly targeted and holds a moderate cash weight oof roughly eight per cent to provide optionality should breadth narrow further.
As a moderating factor, the Barometer team also is overweight outside the U.S. in both our domestic stock market and international, for example U.S. equities with roughly one third Canada, one third U.S. and one third international across the firm.
Finally, given the risk of elevated ongoing inflation, Barometer continues to avoid fixed income and anything that acts like fixed income other than some very short term deposits preferring dividend growth equities as total return income replacement.
Current sector exposures include market weight financials, significant overweights in Industrials, materials and energy and an underweight megacap tech.
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TOP PICKS:
Bombardier (BBD.B TSX)
Bombardier’s transformation from a heavily indebted conglomerate to a pure-play business jet leader is now fully reflected in its financials, and the thesis centers around physical jet delivery growth, margin expansion, and balance sheet optionality. Recent momentum has been driven by a record first quarter (Q1) 2026 backlog of $20.3 billion (up 43 per cent year-over-year) with a 3.6 times book-to-bill, a 25 per cent year-over-year surge in Services revenue, and a FCF guidance raise to over $1 billion for 2026. Debt reduction has been aggressive, with net leverage now at 1.8 times and on pace to come in below their 1.5 times target by year end.
Going forward, we see a number of key catalysts that should continue to drive demand and improve margins. Within their Defense segment, Canada’s selection of the GlobalEye — built on Bombardier’s Global 6500 — for its Airborne Early Warning & Control program is a significant win, with domestic assembly and export potential. A North Atlantic Treaty Organization (NATO) order for 10–12 GlobalEye aircraft is also being tracked, although not yet confirmed. Within the U.S., under the current tax policy, businesses can write off the entire cost of qualifying business aircraft in the first year the asset is placed into service, applying to both new and pre-owned aircraft. Within their Aftermarket business, management targets 70 per cent of the approximately $6 billion addressable aftermarket by 2030, providing durable, high-margin recurring revenue. Lastly, with leverage declining rapidly, mergers and acquisitions (M&A) in aftermarket/defense and opportunistic share buybacks are increasingly on the table.
BHP Group (BHP NYSE)
The lowest cost iron ore producer globally, 69 per cent earnings before interest, taxes, depreciation, and amortization (EBITDA), using cash flow to scale up copper exposure both organically and inorganically. Copper production is up 28 per cent over the last three years and is now 44 per cent of revenue to iron ore’s 45 per cent. Return at least 50 per cent of profit to shareholders in dividends and buybacks. Most of their iron ore is produced in Western Australia and the operations are almost completely vertically integrated BHP owns the mines, rail, ports, etc. Iron ore production in Western Australia is growing nicely as well - from 290 million metric tons in 2025 to 330 million metric tons over the longer term.
Tamarack Valley Energy (TVE TSX)
Tamarack is transitioning into a pure-play Clearwater heavy oil producer with a sector-leading cost structure. For 2026 it projects a sustaining free funds flow breakeven of roughly US$35 per barrel West Texas Intermediate (WTI) (under US$40 unhedged), giving it a wide margin of safety in weaker price environments. The Clearwater offers low-cost, low-decline barrels with multiple payouts. Q1 2026 Clearwater output reached 53,016 barrels of oil equivalent per day (boe/d), up 19 per cent year-over-year.
The key catalyst: in May 2026 Tamarack agreed to sell its Charlie Lake assets for $804 million, leaving it with a net cash position above $125 million and $1.3 billion of available funding. Proceeds support a 25 per cent dividend increase, buybacks, and approximately $75 million of incremental development in the second half of the year driving 15 per cent Clearwater production growth. An expanding waterflood targets 60,000 barrels per day (bbl/d) injection by year-end, underpinning durable free funds flow and total shareholder returns.
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| BBD-B TSX | Y | Y | Y |
| BHP NYSE | Y | Y | Y |
| TVE TSX | Y | Y | Y |
PAST PICKS: JULY 17, 2025
GE Aerospace (GE NYSE)
Then: US$260.28
Now: US$313.68
Return: 21%
Total Return: 21%
Agnico Eagle (AEM TSX)
Then: $118.61
Now: $173.57
Return: 46%
Total Return: 48%
Imperial Oil (IMO TSX)
Then: $112.63
Now: $176.17
Return: 56%
Total Return: 58%
Total Return Average: 42%
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| GEV NYSE | Y | Y | Y |
| AEM TSX | Y | Y | Y |
| IMO TSX | Y | Y | Y |
