Martin Cobb’s Top Picks for July 16, 2026

Market Call – July 16, 2026

Martin Cobb, Senior Vice President, Equities, Lorne Steinberg Wealth Management Inc.

Focus: Global and North American equities

Top Picks: American Express, Alimentation Couche-Tard, Walt Disney

MARKET OUTLOOK:

Forget the macro, inflation, interest rates, artificial intelligence (AI) bubble etc. Forget all of that. More importantly, stock markets simply tend to underperform in a World Cup year on average.

Indeed, over the past decade, markets have only been down during years featuring a World Cup(2022 and 2018). England last won in 1966 and the S&P 500 was down 10 per cent that year.

Obviously, one can’t take this seriously.

That being said, it’s about as useful an indicator as that of trying to predict the macro in order to determine likely market performance. Yet, we can’t help but concern ourselves about the economy, inflation, jobs etc.

But, in investing, that matters a whole lot less than one might think. Simply consider that the Toronto Stock Exchange (TSX) is up by about a third over the past 12 months whereas the economy has flat-lined.

Indeed, if anything, the correlation runs the other way. The stock market, being a discounting mechanism, is a better predictor of where the economy is heading than vice versa.

Corporate profit growth remains remarkably strong, albeit that free cash flow has evaporated in some parts of the market and exploded in others. This has led to some pretty sharp rotation by investors, most notably out of the hyperscalers (Amazon, Microsoft, Alphabet, etc.) and into the suppliers thereto (Nvidia, Micron, Broadcom, etc.). That was until the beginning of this month anyway.

The market feels ‘thin’, providing both danger and opportunity.

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TOP PICKS:

American Express (AXP NYSE)

Founded in 1850, American Express has morphed its business significantly over the decades.

Today, it is known principally for its charge cards but also extends credit and provides a suite of related services to businesses & merchants.

As a payments network, the company competes with both Visa & Mastercard. But also the likes of JPMorgan in cards as well as, theoretically at least, the newer fintech operators.

With the ongoing prestige associated with being an American Express cardholder, the group continues to attract a high-end client base, most of whom pay annual card fees for the various (and ever improving) privileges and rewards.

This is a business that, in the worst quarter of the global financial crisis (GFC), still made a double-digit return on equity (ROE) as it did again pretty much in the throes of COVID (says it all really).

A continuation of upper single-digit revenue growth, sustained profitability, and continued share buybacks gives rise to low teen annual EPS growth.

The stock has always struck me as being too lowly rated and has rerated of late. But, unlike a number of financials, a high-teens multiple of next 12 months earnings does not seem unwarranted.

Alimentation Couche-Tard (ATD TSX)

We stepped back into this one last year after their failure to acquire Seven & i Holdings, having previously sold our position after the approach was announced.

An operator and licensor of over 17,000 convenience stores globally, most of which would be accompanied by gas stations, under various banners including Circle K, Couche-Tard, Ingo, On the Run, and Mac’s.

Fuel constitutes about 75 per cent of sales and half of profits. Sixty per cent of business is in the U.S., close to 30 per cent is in Europe and other regions, and Canada accounts for just over 10 per cent.

Retains a long runway of growth if it just stick to its knitting of driving organic growth supplemented by bolt-on acquisitions.

Still highly fragmented with lots of local mom ‘n’ pop operators so plenty of opportunities for inorganic growth which will only bolster economies of scale, and purchasing power.

Assume half of future growth organic and half from acquisitions, should be able to deliver around six per cent sales compound annual growth rate (CAGR) alongside some margin recovery back to long-term averages, resulting in 10 per cent-ish annual earnings growth.

For which we are paying just under 20 times this year’s earnings (April 2027).

Walt Disney (DIS NYSE)

Disney today consists of entertainment (movies, cable channels, its streaming activities of Disney+ and Hulu, and content), sports (including majority control of ESPN), experiences (parks and cruises) and consumer products.

A portfolio of content that is arguably unrivalled including Marvel, Lucasfilm (Star Wars and Indiana Jones), 21st Century Fox, Pixar, Touchstone, ABC, National Geographic.

Pivot to streaming has been painful but now is at least profitable and getting more so.

Thus, anticipated mid single-digit revenue growth should translate into more like double that at the EPS level for a while.

Like a Disney character I suppose, one can fall in and out of love with them.

With the stock today on a low-teens forward price against earnings multiple, seems a trip to Disneyland is in order.

PAST PICKS:

Adobe (ADBE NASDAQ)

Then: US$384.95

Now: US$224.93

Return: -41%

Total Return: -41%

Diageo (DEO NYSE)

Then: US$100.54

Now: US$85.33

Return: -%16

Total Return: -%13

Visa (V NYSE)

Then: US$346.03

Now: US$359.76

Return: 4%

Total Return: 5%

Total Return Average: -16%