Stan Wong, Portfolio Manager at Scotia Wealth Management
Focus: North American large caps and ETFs
Top Picks: Caterpillar, Eli Lilly, Nvidia
MARKET OUTLOOK:
With the second half of the year underway, the equity market backdrop remains constructive, supported by resilient earnings growth, easing energy-price pressures, and improving financial conditions. While uncertainty remains elevated, investors appear focused on corporate fundamentals and the durability of the economic expansion.
A key development is the sharp pullback in oil prices. After spiking during recent Middle East tensions, crude prices have retreated, helping ease inflation concerns and reducing pressure on consumers, corporate margins, and central bank policy. Energy remains a key variable to monitor, given the recent nature of the decline and the potential for renewed supply disruption.
Expectations for 2026 S&P 500 earnings growth remain solid, supported by artificial intelligence, digital infrastructure, electrification, and the broader capital spending cycle tied to supply-chain realignment. Money market fund assets remain near record levels, representing a sizeable pool of capital that could gradually rotate into risk assets if earnings remain resilient and financial conditions stay stable, potentially providing an additional tailwind for equities. Still, familiar risks remain, including renewed oil-price volatility, sticky inflation, elevated bond yields, renewed geopolitical conflicts, and the approaching U.S. midterm election cycle, which has historically been associated with sharper pullbacks.
Against this backdrop, at The Stan Wong Group, we believe a disciplined and active portfolio management approach remains important, with flexibility to make tactical adjustments as conditions evolve. We continue to focus on high-quality large-cap equities, favouring businesses with dependable earnings, resilient cash-flow generation, competitive advantages, and strong growth prospects, all within the context of each client’s broader total wealth plan.
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TOP PICKS:
Caterpillar (CAT NYSE)
Caterpillar is one of the world’s leading manufacturers of construction, mining and power-generation equipment, with broad exposure to infrastructure, industrial activity and the real economy. Revenue for fiscal 2026 is forecast to exceed US$74 billion, underscoring the company’s global scale. Caterpillar also delivered strong first-quarter 2026 results, with sales and revenues rising 22 per cent year over year to US$17.4 billion.
What makes Caterpillar particularly compelling is that it is no longer just a traditional cyclical machinery story. The company sits at the intersection of several powerful long-term themes, including rising electricity demand, AI data-centre buildouts, mining investment, energy infrastructure and industrial modernization. It should also benefit from reshoring and nearshoring trends, as companies invest in new factories, logistics capacity and more reliable supply chains.
One of the key data points is that Caterpillar has meaningfully increased its long-term sales target for its Power Generation business. That is important because demand from data centres, grid investment and broader electricity needs is becoming a much larger part of Caterpillar’s growth story, beyond its traditional construction and mining equipment businesses.
The demand backdrop remains attractive, with Caterpillar’s record backlog of about US$63 billion giving the company strong visibility into future demand. In our view, Caterpillar offers a compelling way to participate in the physical buildout behind AI, electrification, reshoring and industrial expansion, backed by the scale, diversification and durability of a leading global equipment franchise. Earnings are estimated to grow at an annualized rate of almost 30 per cent over the next few years.
Eli Lilly (LLY NYSE)
Eli Lilly is a global pharmaceutical leader and one of the clearest beneficiaries of the long-term growth in obesity, diabetes and innovative drug development. Revenue for fiscal 2026 is forecast to exceed US$85 billion, underscoring the scale of the business and the strength of its growth profile.
The thesis remains compelling because Eli Lilly is benefiting from powerful demand for its GLP-1 franchise, led by Mounjaro and Zepbound, while continuing to expand into new products and new uses for its existing medicines. The size of the opportunity remains significant, with some industry forecasts suggesting the global market for GLP-1-related therapies could reach US$200 billion by 2030, supported by broader adoption and more convenient oral treatments.
The recent approval of Foundayo, its oral obesity pill, adds another important growth avenue and could broaden the market by giving patients a more convenient treatment option. Importantly, Eli Lilly is not solely an obesity and diabetes story. The company also has meaningful businesses and pipeline opportunities across other therapeutic areas, including oncology, immunology and neuroscience, while aging demographics and rising rates of chronic disease should support long-term demand across its broader product shelf.
In our view, Eli Lilly remains one of the highest-quality ways to invest in the long-term growth of obesity and diabetes treatment, supported by category leadership, strong current demand, expanding product breadth and a pipeline that continues to strengthen its growth story. Earnings are estimated to grow at an annualized rate of more than 25 per cent over the next few years.
Nvidia (NVDA NASDAQ)
Nvidia is the backbone of the AI buildout and one of the clearest beneficiaries of the global expansion in artificial intelligence infrastructure. Revenue for fiscal 2027 is forecast to exceed US$392 billion, underscoring the extraordinary scale the company has already achieved.
The AI infrastructure opportunity remains massive. Management has estimated that annual AI infrastructure spending could reach up to US$4 trillion by 2030, highlighting the scale of the investment cycle still ahead. As hyperscalers and cloud providers continue investing heavily in AI data centres, a meaningful portion of that capital spending should flow to companies like Nvidia through chips, systems, networking products and software.
What sets Nvidia apart is that it is not simply a chip supplier. The company has evolved into a full-stack AI infrastructure platform, supported by market leadership, a powerful software ecosystem, deep customer relationships and significant scale in AI compute. That platform advantage helps reinforce customer stickiness and allows Nvidia to capture more value from the broader AI spending cycle.
While investors are increasingly focused on competition and capital-spending discipline across the sector, Nvidia remains central to the AI infrastructure stack. In our view, Nvidia remains one of the highest-quality ways to invest in AI infrastructure, supported by platform depth, scale and strong demand. Earnings are estimated to grow at an annualized rate of more than 50 per cent over the next few years.
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| CAT NYSE | Y | Y | Y |
| LLY NYSE | Y | Y | Y |
| NVDA NASDAQ | Y | Y | Y |
PAST PICKS: AUG. 8, 2025
Netflix (NFLX NASDAQ)
Then: US$1211.64
Now: US$75.24
Return: -38%
Total Return: -38%
Visa (V NYSE)
Then: US$336.78
Now: US$347.32
Return: 3%
Total Return: 4%
Waste Management (WM NYSE)
Then: US$235.09
Now: US$230.90
Return: -2%
Total Return: -0.25%
Total Return Average: -11%
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| NFLX NASD | Y | Y | Y |
| V NYSE | N | N | N |
| WM NYSE | Y | Y | Y |
