Andrey Omelchak’s Top Picks for Aug. 31, 2026

Andrey Omelchak, CEO & CIO, LionGuard Capital Management

Focus: North American small and mid caps

Top Picks: Magellan Aerospace, Badger Infrastructure, Black Diamond

MARKET OUTLOOK:

Despite persistent tariff headlines and geopolitical uncertainty, we believe the opportunity set for investors remains very attractive, with increasing amounts of capital being directed toward Canada. The key is to stay invested rather than try to time the market, while remaining selective in where capital is deployed.

Two themes stand out: booming Canadian defence spending and the massive “Build Canada” investment cycle.

Defence is perhaps the most exciting opportunity we see today. The government’s new Defence Industrial Strategy points to more than $500 billion of investment and economic activity through 2035, including approximately $180 billion of defence procurement and $290 billion of defence-related infrastructure.

At the same time, Canada intends to increase the share of defence acquisitions awarded to Canadian companies to 70 per cent, from roughly 43 per cent, while the new Defence Investment Agency and Build–Partner–Buy framework are designed to prioritize domestic capabilities and accelerate procurement. We estimate this could increase the addressable domestic procurement opportunity by roughly 700 per cent versus the previous decade.

Canada also has extraordinary wealth in energy, critical minerals and natural resources. Unlocking it requires faster approvals, fewer interprovincial barriers and major investment in power, transportation and infrastructure.

Canada is finally waking up. Now we need urgency: approve projects, reduce unnecessary regulation, improve competitiveness, lower taxes and create an environment that attracts domestic and foreign capital. Rather than fighting over the existing economic pie, we should focus on making it much larger. This is a unique moment to build for generations to come.

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TOP PICKS:

Magellan Aerospace (MAL TSX)

One of our highest-conviction ideas and a direct beneficiary of a multi-year global aerospace and defence investment cycle.

Canada is increasing defence spending and prioritizing domestic production, and Magellan is converting that into awards. In July it won a Government of Canada contract to establish domestic production of the M-72 Light Anti-Tank Weapon under the Munitions Supply Program. It also holds a teaming agreement covering heavyweight torpedo production and in-service support for the Canadian Patrol Submarine Project, and an MOU with GE Aerospace to become Canada’s centre of excellence for F414 engine MRO — contingent on Canada selecting the Saab Gripen E, a decision still open.

The opportunity extends well beyond Canada. NATO countries are rebuilding capabilities, and the EU’s Readiness 2030 plan aims to mobilize up to €800 billion of additional defence spending through 2030. Unprecedented Airbus and Boeing backlogs provide another multi-year growth engine.

Equally important is operating leverage. Magellan has a large manufacturing footprint with substantial excess capacity. Second quarter (Q2) showed margin expansion potential: revenue up 22 per cent to $305.6 million, adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) more than doubling to $43.0 million from $21.1 million, and adjusted EBITDA margin expanding to 14.1 per cent from 8.5 per cent. We believe margins can move significantly higher as utilization improves.

Building on Q2 results, we believe Magellan is entering a period where higher volumes, better capacity utilization and major new contract awards can drive earnings substantially faster than revenues. At the same time, the company is trading at high discount to aerospace and defence peers.

Badger Infrastructure (BDGI TSX)

Our preferred way to participate in the massive North American infrastructure buildout. Demand for hydrovac services is exceptionally strong across utilities, power, data centres, transportation, LNG and industrial construction, with customer project backlogs extending well into the next decade.

The company delivered approximately 23 per cent organic revenue growth last quarter, despite growing its fleet only eight per cent. The key driver was revenue per truck (RPT), which increased 14 per cent through a combination of higher utilization, volume and pricing. We believe investors greatly underestimate the potential for continued RPT growth for the balance of 2026 and in 2027. Branch optimization, data analytics and operational initiatives are driving higher utilization, which together with a better pricing environment are fueling higher RPT.

Demand is strong enough that new hydrovacs are being readily absorbed, and Badger is preparing for a U.S. manufacturing facility, with low capex requirements, to support continued fleet expansion.

We see another potentially significant growth engine in industrial cleaning, a high-margin, highly complementary service that can leverage Badger’s existing customers, branches and operating infrastructure. Over time, industrial cleaning can become a huge opportunity for BDGI.

There is approximately $4 trillion of North American projects potentially beginning over the next 18 months. Against this backdrop, we believe Badger can sustain strong organic growth while RPT, utilization and operating leverage continue improving.

Black Diamond (BDI TSX)

One of our highest-conviction ways to participate in the coming “Build Canada” investment cycle through its Workforce Solutions business. The urgency to approve and advance major Canadian projects has increased substantially following the latest escalation in U.S. tariffs, reinforcing the need for Canada to accelerate infrastructure, energy and resource development.

WFS has over $2 billion of formal bids outstanding across more than 20 active Canadian projects, spanning energy, mining, infrastructure, data centres and defence. That is more than double the company’s own available fleet capacity — the constraint is beds, not demand.

The key opportunity is utilization. WFS ran at 55.2 per cent in Q2, leaving roughly 5,300 to 5,500 beds available. Management notes the segment has historically operated in the 90 per cent-plus range. As projects move into construction, we believe utilization can move materially higher, creating substantial operating leverage with very limited incremental capital.

Major potential catalysts include LNG Canada Phase 2, associated pipeline expansions and numerous other nation-building projects. We also view the approximately US$50 billion Alaska LNG project as another potentially enormous North American workforce-accommodation opportunity as it progresses toward construction.

Industry capacity is limited. Importantly, economics for newly built accommodation capacity would require rental pricing more than twice current levels, giving existing fleet owners such as BDI a major pricing power prior to supply response.

PAST PICKS: JAN. 16, 2026

Bird Construction (BDT TSX)

Then: $29.90

Now: $66.67

Return: 123%

Total Return: 125%

Trisura Group (TSU TSX)

Then: $45.38

Now: $41.66

Return: -8%

Total Return: -8%

Electrovaya (ELVA TSX)

Then: $13.68

Now: $9.06

Return: -34%

Total Return: -34%

Total Return Average: 28%