Brian Madden’s Top Picks for Sept. 4, 2026

Brian Madden, Chief Investment Officer, First Avenue Investment Counsel

Focus: North American equities

Top Picks: Teck Resources, Costco Wholesale, WSP Global

MARKET OUTLOOK:

U.S. and Canadian stocks marched onwards to fresh all time highs since my last appearance on the show on Aug. 7 before retreating somewhat in recent days and weeks. In terms of what’s changed since then… a lot, namely:

• Exceptionally strong second quarter earnings results were reported in both Canada (plus 17 per cent) and the U.S. (plus 55 per cent).
• Trade talks between Canada and the U.S. broke down, reigniting the previously dormant tit-for-tat tariff war.
• Renewed military flareups between the U.S. and Iran have driven oil prices higher.
• A rare, coordinated effort between the U.S. Treasury and Japan to shore up the yen briefly arrested a troubling rise in U.S. bond yields, while simultaneously catalyzing a selloff in the U.S. dollar and a massive rally in gold.

We expect inflation to remain elevated through the remainder of the year and economic growth to remain supportive of corporate earnings, driven by the well entrenched generational investment in artificial intelligence (AI) and data centres south of the border and the nascent, but accelerating investment renaissance in Canada, cited enthusiastically by several Big Six bank CEOs on recent conference calls and about which we will likely learn more at the upcoming Canada Investment Summit in Toronto later this month.

Opportunities we are pursuing range from critical minerals producers that benefit from ongoing massive infrastructure buildouts, dominant secular growth stalwarts in non-cyclical industries to “AI babies thrown out with the bath water” – i.e. stocks that the market, in our view, has mispriced.

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TOP PICKS:

Teck Resources (TECK/B TSX)

Teck is Canada’s largest base metals producer, mining & smelting copper & zinc, with mines in Canada, Chile, Peru and Alaska and a zinc and lead smelting complex in Trail, BC.

Teck “cleaned & greened up” the business via divestiture of the coal assets and their stake in the Fort Hills oil sands mine. Already the world’s largest zinc producer and a Top 10 North American copper producer, pro forma the friendly merger with Anglo American Plc, which is expected to occur between September and March, Teck will become a global Top 5 copper producer, with a six per cent global market share.

We expect with the increasing concentration of copper in its production, and with greater size and liquidity, demand for its shares will be strong from passive and active investors alike. We expect robust organic growth, with the Highland Valley mine life extension adding 18 years of production at that operation, debottlenecking initiatives at the Quebrada Blanca 2 (QB2) mill boosting copper production there and greenfield opportunities at hand to develop their San Nicolas and Zafranal deposits.

The merger is expected to generate $800 million in synergies and creates an opportunity to boost earnings before interest, taxes, depreciation and amortization (EBITDA) by $1.4 billion at the QB2 mine & the Anglo Collahuassi mine which are just nine kilometres apart. Capital spending has dropped sharply after the QB2 build, supporting 10 per cent compound growth in the dividend over the last decade. A nice “kicker” is the nine per cent arbitrage spread on the Anglo share exchange offer.

Costco Wholesale (COST NASDAQ)

Costco is the third largest retailer in the world with its pioneering presence and its undisputed leadership in warehouse club retailing. With 931 stores globally, serving 83 million loyal paying members, Costco enjoys high traffic and repeat business alongside the recurring membership fees – with 92 per cent member retention despite periodic fee increases. Stores stock a narrow assortment of 4,000 branded and Kirkland (private label) items and rely on an efficient supply chain, procurement clout and rapid inventory turns to price sharply while maintaining healthy gross margins of 11 per cent and robust returns on equity just below 30 per cent.

Steady store expansion, superior same store sales growth and a growing e-commerce capability have led to a 10 per cent compound growth rate in sales over the past decade while earnings have compounded at 14 per cent over that time frame.

The shares themselves – which almost always trade at a premium to peers - have nevertheless generated a compound annual return of 17 per cent since the initial public offering in 1985 via price appreciation, regular and occasional special dividends.

WSP Global (WSP TSX)

WSP is a global diversified engineering company serving clients in transportation & infrastructure, earth & environment, property and building and power and energy end markets.

With a robust backlog of over $20 billion in contracts, representing 1.3 times trailing 12 month revenues, the company has strong demand visibility and targets large addressable markets advantaged by secular growth and bolstered by tailwinds including a civil infrastructure deficit in its core markets, environmental, sustainability, climate change opportunities and the massive and ongoing build out of data centres globally and the related electrical infrastructure required to support them.

Beyond this, WSP is an accomplished and proven consolidator of the globally fragmented engineering sector, having completed 20 acquisitions over the last five years, include the recent $3.3 billion acquisition of TRC Companies. The company is currently pursuing its largest acquisition to date - Arcadis NV, a $7.5 billion target. The 45 per cent drawdown in the stock from September through July – in our view – represents another misguided case of “baby thrown out with bathwater” as investors hunt for AI disruption candidates, with professional services companies frequently near the top of the hit list. Priced at 15 times earnings, and with earnings expected to grow at a compound pace of 16 per cent over the coming three years, we see an exceptional blend of value and growth in the shares.

PAST PICKS: SEPT. 18, 2025

Constellation Software (CSU TSX)

Then: $4310.95

Now: $2952.50

Return: -32%

Total Return: -31%

KKR (KKR NYSE)

Then: US$149.34

Now: US$107.17

Return: -28%

Total Return: -28%

Telus (T TSX)

Then: $21.83

Now: $13.35

Return: -39%

Total Return: -33%

Total Return Average: -31%