Ernest Wong, Head of Research & Portfolio Manager, Baskin Wealth Management
Focus: North American large caps
Top Picks: Brookfield Corp, Tourmaline Oil, FirstService
MARKET OUTLOOK:
The markets remain volatile as new developments in artificial intelligence (AI) cause wild swings in the U.S. even as the S&P 500’s concentration remains at record levels. With over half of the S&P 500 now concentrated in AI-related companies, AI and the supporting data-centre and chip buildout has become a significant factor in forward returns.
Canada remains in a technical recession, but the Toronto Stock Exchange (TSX) has benefitted from ongoing strong performance for the banks and energy sector. With the U.S. declining to extend the Canada-United States-Mexico Agreement (CUSMA), we expect more volatility from trade negotiations.
We are currently seeing good value in non-AI related sectors that are out-of-favour despite having strong financial reports.
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TOP PICKS:
Brookfield Corp (BN TSX)
Brookfield Corporation has underperformed as worries about private credit and its exposure to software have hit shares of Brookfield Asset Management and other alternative managers. We believe Brookfield Asset Management (BAM) has low exposure to these issues given their focus on infrastructure and has very little portfolio exposure to software and retail private credit funds. We expect strong inflows to BAM over the next few years in the credit space as well as from newly launched AI-related funds.
Brookfield Corporation shares are a cheaper way to buy BAM shares (trades at approximately 20 per cent net asset value discount) and also has capital allocation upside.
Tourmaline Oil (TOU TSX)
Tourmaline Oil is the largest natural gas driller in Canada. North American natural gas pricing has not risen despite issues in the Middle East given the lack of export capacity, which has been reflected in Tourmaline’s stock underperformance versus other oil and gas companies.
Tourmaline has been carefully managing its production and infrastructure buildout to coincide with the ramp up of LNG Canada and hopefully higher natural gas prices. We think that free cash flow will grow sharply as it completes its infrastructure buildout, and new liquefied natural gas-linked contracts start over the next few quarters.
FirstService (FSV TSX)
FirstService has two businesses, a property management business, and a “brands” business which provides renovations, fire protection, and property restoration services. The renovations business has been impacted over the last few years from weak storm activity and a weak housing market, while acquisition activity has been low as valuations remain high.
We think this is an opportunity to buy a well-run compounder at an attractive valuation.
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| BN TSX | Y | N | Y |
| TOU TSX | Y | N | Y |
| FSV TSX | Y | N | Y |
PAST PICKS: NOV. 4, 2025
Restaurant Brands (QSR TSX)
Then: $93.31
Now: $106.30
Return: 14%
Total Return: 17%
CCL Industries (CCL.B TSX)
Then: $77.62
Now: $92.70
Return: 19%
Total Return: 21%
Constellation Software (CSU TSX)
Then: $3507.03
Now: $2780.45
Return: -21%
Total Return: -21%
Total Return Average: 6%
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| QSR TSX | Y | N | Y |
| CCL.B TSX | Y | N | Y |
| CSU TSX | Y | N | Y |
