Market Call – August 12, 2026
Chris Blumas, Portfolio Manager, Raymond James Investment Counsel
Focus: North American large caps
MARKET OUTLOOK:
There is no shortage of uncertainty in financial markets these days. The war in Iran has caused a spike in energy prices that has reverberated around the world and while prices have moderated somewhat, this may not last as global inventories continue to be drawn down at an accelerated pace. In addition, the build out of artificial intelligence (AI) infrastructure has increased the demand for commodities and power and has also contributed to higher inflation. In the end, U.S. inflation has remined above the U.S. Federal Reserve’s two per cent goal for more that five years and this gives the Fed less flexibility to ease interest rates.
Currently, around one-third of U.S. Treasury Securities are owned by foreign countries. The persistent U.S. trade deficit helps to finance the increase in government debt. However, with greater onshoring and the repatriation of manufacturing capacity, there could be less demand for U.S. Treasury Securities in the future.
The U.S. recently intervened in the currency markets to support the Japanese Yen. It’s been almost 30 years since the U.S. has directly intervened in currency markets to support the Yen and highlights the extent the current administration will go to keep a lid on interest rates with midterm elections approaching.
Looking forward, higher inflation and lower demand for U.S. debt are significant catalysts that could continue to push U.S. interest rates higher and create a headwind for economic growth.
While it’s important to understand the fears in the markets, it is also important to recognize the opportunities and position yourself to benefit from the powerful long-term impacts of compounding. While it is difficult to know how things will play out over the short term, history has proven that it pays to stay invested and remain mindful of company valuations.
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TOP PICKS:
Stantec (STN TSX)
Stantec is a leading global design and consulting firm headquartered in Edmonton, Alberta. The company provides a broad range of professional services, including engineering, architecture, environmental consulting, project management, and urban planning.
Stantec serves both public and private sector clients across infrastructure, water, transportation, buildings, energy, and environmental markets. The company is one of the largest engineering and design firms in North America and generates around 75 per cent of its revenues from this marketplace.
Over the years, Stantec has grown organically and through strategic acquisitions. This has allowed the company to expand its expertise and strengthen its regional footprint.
Over the last year, Stantec’s share price is down by more than 30 per cent as fears about artificial intelligence and service disintermediation have negatively impacted the industry. Going forward, artificial intelligence has the potential to make Stantec more efficient and improve project quality across its service portfolio.
The shares currently trading around 16.5 times forward earnings and have a trailing free cash flow yield of almost six per cent.
CGI (GIB.A TSX)
CGI is an IT outsourcing and consulting company, and its revenues are split almost evenly between these service offerings. The company has clients around the world and a strong competitive position in North America and Europe.
As companies look to boost their efficiency and transition to a more digital world, CGI’s service offerings and global delivery model lead to enduring client relationships and a high level of recurring revenues.
Going forward, the CGI is well positioned to benefit from trends towards greater digitization and increased use of artificial intelligence. Additionally, the company has the financial flexibility to create value through acquisitions, organic initiatives, and share buybacks.
The shares currently trading around 11 times forward earnings and have a trailing free cash flow yield of more than 11 percent.
KKR (KKR NYSE)
KKR is an alternative asset manager with a unique business model and a global presence. The company earns a variety of fees (management, transaction, monitoring, & performance) from managing third party capital. KKR has almost $800 billion in assets under management (AUM) and around half of this AUM is perpetual in nature.
Overall, KKR’s business is scaling very well, and the company is expected to continue raising large amounts of capital over the medium term as institutional investors continue to shift more of their assets into higher yielding asset classes with less apparent volatility.
Over the last year, KKR’s share price is down by almost 30 per cent as concerns about private credit have negatively impacted the entire industry. While KKR’s sponsored entity, KKR FS Income Trust, only meet around 80 per cent of its recent redemption requests, this is well within its contract rights and redemption requests for the fund, which were around 6.5 per cent of assets under management, were among the lowest in the industry.
The shares currently trade at around 15 times forward estimates of adjusted net income per share.
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| STN TSX | N | N | Y |
| GIB.A TSX | N | N | Y |
| KKR NYSE | Y | Y | Y |
PAST PICKS: AUG. 8, 2025
Brookfield Infrastructure (BIP-UN TSX)
Then: $41.42
Now: $55.22
Return: 33%
Total Return: 39%
Mainstreet Equity (MEQ TSX)
Then: $194.96
Now: $170.01
Return: -13%
Total Return: -13%
Alphabet (GOOGL NASD)
Then: US$201.42
Now: US$342.19
Return: 70%
Total Return: 70%
Total Return Average: 32%
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| BIP.UN TSX | N | N | N |
| MEQ TSX | Y | Y | Y |
| GOOGL NASD | Y | Y | Y |
