Stan Wong, Portfolio Manager, Scotia Wealth Management
Focus: North American Large Caps & ETFs
Top Picks: CP Kansas City, JPMorgan Chase, Taiwan Semiconductor
MARKET OUTLOOK:
Equities remain on solid ground, but the bar is getting higher. Resurging oil prices and elevated bond yields have brought inflation, valuations and central bank policy back into sharper focus, even as corporate earnings remain the key anchor.
Corporate America continues to deliver strong earnings growth, fuelled by artificial intelligence, digital infrastructure, electrification, and a broader capital-spending cycle. Current forecasts suggest the expansion still has runway through the remainder of 2026 and into 2027. Strong results have also improved the valuation picture, with forward price-to-earnings ratios declining from earlier levels as profits have outpaced stock prices. The key question is whether earnings growth is broadening across sectors and justifying current valuations.
Oil prices and bond yields remain important pressure points. Higher crude prices can complicate inflation, pressure consumers and margins, and keep central banks cautious. Higher yields also create more competition for capital, particularly for companies trading at premium valuations. U.S. money market fund assets recently reached a record US$7.98 trillion, representing substantial potential buying power as market conditions evolve.
The outlook remains constructive, but the hurdles are higher. Investors should remain focused on the interaction between earnings, inflation, rates, valuations, liquidity and breadth. At The Stan Wong Group, we continue to favour high-quality large-cap businesses with resilient cash-flow generation, durable competitive advantages and strong growth prospects, while recognizing that valuation discipline is increasingly important. As always, investment decisions should be made within the context of each investor’s broader total wealth plan.
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TOP PICKS:
CP Kansas City (CP TSX)
Canadian Pacific Kansas City operates the only single-line railway connecting Canada, the United States and Mexico. Fiscal 2027 revenue is forecast to exceed $17 billion, while earnings per share are projected to grow at an annualized rate of more than 12 per cent through 2028. This combination of scale, steady growth and a unique continental network distinguishes CPKC from its North American railway peers.
The combination of Canadian Pacific and Kansas City Southern in 2023 created opportunities extending well beyond cost savings. CPKC’s unique Canada–U.S.–Mexico network positions it as a major beneficiary of nearshoring as companies relocate production and reorganize supply chains within North America. Its single-line service can transport automotive products, grain, energy, chemicals and consumer goods across all three countries more efficiently, creating opportunities for market share gains and long-term growth. An eventual easing of North American trade disputes would provide an additional catalyst by improving business confidence and encouraging greater cross-border freight volumes.
CPKC’s latest quarterly results exceeded expectations, with broad-based growth across its operations. Management continues to expect stronger growth during the second half of the year and remains committed to its longer-term targets for revenue, earnings, and free cash flow. As merger-related efficiencies build and more customers adopt its single-line routes, the company should generate stronger margins and improved returns on invested capital.
From a technical perspective, CPKC trades above its rising 200-day moving average, confirming a longer-term uptrend. A one-of-a-kind continental network, nearshoring exposure and further merger benefits make CPKC one of North America’s highest-quality transportation companies.
JPMorgan Chase (JPM NYSE)
JPMorgan Chase is the largest U.S. bank and one of the world’s most diversified financial institutions, with businesses across consumer and commercial banking, credit cards, investment banking, trading, wealth management and asset management. Fiscal 2027 revenue is forecast to approach US$213 billion, while the shares offer a dividend yield of approximately 1.7 per cent. This breadth allows JPMorgan to generate strong earnings across a range of economic and market environments.
The broader industry backdrop remains favourable. Resilient economic growth, elevated interest rates and substantial financing needs across AI infrastructure, energy and manufacturing are driving demand for banking services, while a recovery in mergers, acquisitions and capital markets activity offers another potential earnings driver. Rising technology, cybersecurity and regulatory costs also favour large, well-capitalized institutions capable of gaining market share.
JPMorgan’s greatest advantage is its scale, allowing heavy investment in technology and artificial intelligence spread across an enormous customer base. Its strong balance sheet and deposit franchise allow continued lending when weaker competitors turn cautious. Recent quarterly results exceeded expectations on higher net interest income, strong capital markets activity and continued growth in asset and wealth management, prompting a dividend increase and a US$50-billion share repurchase program following the Federal Reserve’s stress test.
From a technical perspective, JPMorgan trades above its rising 200-day moving average, maintaining a pattern of higher highs and lows that confirms an intact uptrend. Industry-leading scale, multiple earnings engines and continued market share gains make JPMorgan one of our top names in the U.S. financial sector.
Taiwan Semiconductor (TSM NYSE)
Taiwan Semiconductor Manufacturing Company, commonly known as TSMC, is the world’s largest and most advanced semiconductor foundry. It manufactures chips for the world’s leading technology companies, including Nvidia, Apple, Broadcom, and AMD. Fiscal 2027 revenue is forecast to reach more than US$230 billion, while earnings per share are projected to grow at an annualized rate of more than 40 per cent over the next few years.
TSMC is one of the clearest beneficiaries of the global artificial-intelligence investment cycle. Advanced AI processors require leading-edge manufacturing, sophisticated packaging and enormous production scale. Few companies possess these capabilities, and TSMC remains the industry leader. As demand for AI accelerators, high-performance computing and advanced smartphones grows, customers are competing to secure access to its manufacturing capacity.
The company’s latest quarterly results exceeded expectations, driven by strong demand for AI and high-performance-computing chips. TSMC continues to expand its leading-edge capacity and is progressing with its next generation of two-nanometre manufacturing technology. Its expanding facilities in Taiwan, the United States, Japan, and Europe should also strengthen its global production network and bring capacity closer to major customers.
From a technical perspective, TSMC trades comfortably above its rising 200-day moving average and recently moved above a shorter-term consolidation range. The shares continue to form a pattern of higher highs and higher lows, confirming positive momentum across multiple time frames. Industry-leading technology, limited competition, powerful AI demand and exceptional earnings growth make TSMC one of our top names in the global technology sector.
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| CP TSX | Y | Y | Y |
| JPM NYSE | Y | Y | Y |
| TSM NYSE | Y | Y | Y |
PAST PICKS: SEPT. 4, 2025
Amazon.com (AMZN NASD)
Then: US$235.68
Now: US$251.55
Return: 7%
Total Return: 7%
Cardinal Health (CAH NYSE)
Then: US$149.34
Now: US$239.74
Return: 61%
Total Return: 62%
DoorDash (DASH NASD)
Then: US$248.78
Now: US$195.31
Return: -21%
Total Return: -21%
Total Return Average: 16%
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| AMZN NASD | Y | Y | Y |
| CAH NYSE | Y | Y | Y |
| DASH NASD | Y | Y | Y |
