Ryan Bushell, CEO and Portfolio Manager, Newhaven Asset Management
Focus: Canadian dividend stocks
Top Picks: CAE, Tourmaline Oil, Brookfield Infrastructure Units
MARKET OUTLOOK:
The highly anticipated end to the conflict in Iran has been discounted for several weeks now and it will be interesting to see if the broader indexes can sustain the momentum into the summer absent another major catalyst.
Expectations of interest rate increases were unexpectedly reinforced by new U.S. Federal Reserve Chair, Kevin Warsh, but even that news was a minor bump in the road.
Massive debt and equity issuance by U.S. technology giants has been easily absorbed so far, likely emboldening even more issuance in the second half of the year.
Nearly all historical valuation signals would indicate caution at current levels and we believe this time is not different.
In Canada, banks have continued their rally to all time high valuations despite a middling economic outlook and sluggish loan growth, powering the Toronto Stock Exchange (TSX) to new heights, while energy is now cooling off in the face of lower commodity prices.
We are pleased with the absolute and relative outperformance of our portfolios in 2026 but remain cautious on the prospects for the second half of the year.
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TOP PICKS:
CAE (CAE TSX)
CAE has had a difficult 2026, dropping nearly $10 as the market has been disappointed with the pace of the turnaround and reorganization efforts within the company combined with fears over travel demand owing to heightened commodity prices stemming from the Iran conflict.
With that fear now abating and expectations tamped down by management, we feel this could be a good window for CAE which continues to win new domestic defense contracts and has structural tailwinds.
We have been hoping for a dividend reinstatement for some time now and it appears 2027 could be the year we get it.
Tourmaline Oil (TOU TSX)
Tourmaline is well positioned to benefit from structural growth in LNG exports in both Canada and the US in the coming years.
The more than 50 per cent increase of North American Liquefied Natural Gas (LNG) liquefaction capacity in the coming years will raise the floor for natural gas pricing on the continent especially when combined with growing domestic demand as GE Vernova and others crank out gas turbines at a feverish pace to satisfy AI related demand.
The recent drop in TOU’s share price on headlines in Iran has very little to do with the setup for the company and we would be taking advantage of any weakness with the shares sitting at the bottom of a nearly five year range.
Brookfield Infrastructure Units (BIP.UN TSX)
With the simplification vote coming in July, Brookfield Infrastructure is looking attractive to us.
A simplified structure will increase the tradeable float for global institutions and index funds which should support the shares once they are consolidated.
The uniqueness and strength of their portfolio of infrastructure assets protects downside.
The units are yielding 4.65 per cent and seem poised to break out of a five year trading range.
Its hard to find undervalued assets in this market, but we believe Brookfield Infrastructure fits that description presently.
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| CAE TSX | Y | Y | Y |
| TOU TSX | Y | Y | Y |
| BIP.UN TSX | Y | Y | Y |
PAST PICKS:
Northland Power (NPI TSX)
Then: $21.94
Now: $22.73
Return: 4%
Total Return: 7%
BCE (BCE TSX)
Then: $35.37
Now: $32.82
Return: -7%
Total Return: -2%
CNQ (CNQ TSX)
Then: $41.24
Now: $58.56
Return: 42%
Total Return: 46%
Total Return Average: 17%
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| NPI TSX | Y | Y | Y |
| BCE TSX | Y | Y | Y |
| CNQ TSX | Y | Y | Y |
