Rebecca Teltscher, Portfolio Manager, Newhaven Asset Management
Focus: Canadian dividend stocks
Top Picks: Tourmaline Oil, BCE, Canadian Natural Resources
MARKET OUTLOOK:
Canadian and U.S. equity markets continue to trade at historically elevated valuation levels, leaving little margin for error. While economic growth and corporate earnings have remained relatively steady this year, several indicators suggest that underlying momentum is beginning to weaken.
At the same time, inflationary pressures have re-emerged, prompting markets to increasingly consider the possibility of additional interest rate increases. Investor sentiment has also been supported by expectations that the conflict involving Iran is nearing an end; however, no formal resolution has been reached, and the risk of renewed escalation across the region remains significant.
Against this backdrop of elevated valuations and increasing uncertainty, large technology companies have capitalized on favorable market conditions by bringing forward some of the largest initial public offerings in history.
This surge in issuance may represent a late-cycle characteristic reminiscent of the technology bubble of the late 1990s, when strong investor enthusiasm masked deteriorating fundamentals.
Given these conditions, attractive investment opportunities appear increasingly scarce, reinforcing the importance of maintaining a disciplined and selective approach to capital allocation.
- Market-moving news, fast: Get the BNN Bloomberg App now
- Sign up for the Market Call Top Picks newsletter at bnnbloomberg.ca/newsletters
TOP PICKS:
Tourmaline Oil (TOU:TSX)
Tourmaline Oil represents an attractive investment opportunity at current levels following a pullback of more than 10 per cent from its recent highs.
We initiated a position after Shell’s acquisition of ARC Resources, as we wanted to maintain exposure to Canada’s natural gas sector, where we continue to see compelling long-term growth opportunities driven by increasing liquefied natural gas (LNG) export capacity.
As Canada’s largest natural gas producer, Tourmaline is distinguished by its low-cost asset base, extensive reserve portfolio, and disciplined operating model. These competitive advantages position the company to generate strong cash flows throughout commodity price cycles while providing significant leverage to improving natural gas fundamentals.
With North American LNG exports expected to support higher long-term demand and pricing, Tourmaline is well positioned to benefit from this structural growth trend, making the recent share price weakness an attractive opportunity for long-term investors.
BCE (BCE:TSX)
BCE represents an attractive long-term investment opportunity as the telecommunications sector remains out of favour, creating a compelling entry point at current valuations.
The company offers an attractive dividend yield, supported by stable cash flows and the defensive characteristics inherent in essential telecommunications services. Beyond its traditional wireless and broadband operations, BCE is strategically diversifying its business by expanding into AI infrastructure through partnerships such as the Merritt data centre in British Columbia and the planned AI data centre in Saskatchewan.
Importantly, BCE’s strategy focuses on providing the underlying infrastructure required to support AI workloads rather than investing directly in AI hardware. This approach allows the company to benefit from growing demand for data centre capacity while avoiding the risks associated with semiconductor cycles, rapid technological change, and chip obsolescence.
Canadian Natural Resources (CNQ:TSX)
Canadian Natural Resources remains one of our highest-conviction long-term investments. The recent 15 per cent decline in the share price, driven largely by lower oil prices and market expectations that the conflict involving Iran has concluded, has created an attractive opportunity to add to the position. While markets appear to be pricing in a lasting resolution, we believe it is premature to assume geopolitical risks in the region have been fully eliminated.
More importantly, Canadian Natural Resources has demonstrated its ability to generate strong profitability across commodity price cycles. The company remained profitable when oil traded near US$50 per barrel and continues to produce robust cash flows at current price levels, despite oil trading well below its recent highs.
The recent pullback has increased the dividend yield to more than four per cent, providing investors with an attractive and growing income stream while they wait for value to be recognized. Supported by one of the industry’s strongest management teams, a disciplined capital allocation strategy, and a portfolio of high-quality, low-decline assets, Canadian Natural Resources is widely regarded as a best-in-class operator that is well positioned to create long-term shareholder value.
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| TOU TSX | Y | Y | Y |
| BCE TSX | Y | Y | Y |
| CNQ TSX | Y | Y | Y |
PAST PICKS: JULY 3, 2025
NFI Group (NFI TSX)
Then: $18.60
Now: $22.85
Return: 23%
Total Return: 23%
Brookfield Renewable Partners (BEP-U TSX)
Then: $35.92
Now: $46.93
Return: 31%
Total Return: 37%
Premium Brands (PBH TSX)
Then: $82.29
Now: $85.87
Return: 4%
Total Return: 9%
Total Return Average: 69%
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| NFI TSX | Y | Y | Y |
| BEP-U TSX | Y | Y | Y |
| PBH TSX | Y | Y | Y |
