David Burrows’ Top Picks for Oct. 22, 2026

David Burrows, Chairman & Chief Investment Officer, Barometer Capital Management

Focus: North American Large Caps

Top Picks: Cash, Suncor, Eli Lilly

MARKET OUTLOOK:

The stock market is sending mixed signals. While the major indexes appear resilient near their highs, the environment beneath the surface is growing increasingly choppy. We note that the market has fewer stocks participating in the rally. Smaller companies and consumers of capital, for instance, are struggling under the weight of higher borrowing costs, and the technology sector—which has led the market for so long is under pressure and is now experiencing significant outflows. Alphabet and Meta now have negative cashflow.

A major driver behind this shift is the realization that inflation may be stickier than expected with recent data reaccelerating higher. With long-term interest rates climbing globally, borrowing is becoming more expensive. This also places a heavy burden on consumers who are already carrying record levels of debt, which is why consumer-focused sectors and real estate are currently best avoided.

In this environment, remaining focused in sectors showing relative strength and built-in inflation protection is key. For now, that means looking outside the crowded U.S. tech space. International markets, particularly Canada, Latin America and Japan, are offering compelling value and resilience. We are also seeing clear leadership in tangible, cash-generating businesses—specifically companies with pricing power in commodities, energy, financials, and companies with strong track records of consistently growing their dividends.

When overall market participation narrows, playing strong defense is crucial. By using a disciplined sell strategy(stop losses) and letting cash balances build naturally as weaker stocks are sold off investors can protect their capital. Barometer is currently holding 25 to 35 per cent cash depending on the mandate. This disciplined approach provides a vital safety net today, preserving dry powder to seize new opportunities when broader market health eventually improves.

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TOP PICKS:

Cash

Holding a higher cash weight provides investors protection and optionality for when market conditions begin to improve.

Suncor (SU TSX)

In today’s environment of sticky inflation and elevated geopolitical uncertainty, Suncor Energy stands out as a highly defensive yet remarkably cash-generative investment. Commodities naturally appreciate alongside consumer prices, providing portfolios with a built-in hedge against diminishing purchasing power. Furthermore, Suncor’s vast reserves—boasting 30 billion barrels of contingent resources with zero exploration risk—offer a secure, domestic energy supply that is insulated from international flashpoints.

What truly distinguishes Suncor during periods of crude price volatility is its integrated business model. When global oil prices fluctuate due to geopolitical shocks, Suncor’s downstream refining operations—currently running at record throughput with capacity expanding—step in to capture strong refining margins, effectively smoothing out corporate earnings.

This operational stability, combined with long-life oil sands assets that require very low ongoing capital expenditure, translates into massive free cash generation. In the second quarter alone, free funds flow surged to $4.0 billion. Suncor is aggressively returning this capital directly to shareholders. Management recently accelerated monthly buybacks, pushing expected 2026 share repurchases to a massive $4.7 billion, while simultaneously growing their reliable quarterly dividend.

The company is executing this capital return strategy while operating from a position of pristine financial strength. Net debt to capital has plummeted to just 8.5 per cent. With corporate breakeven costs targeted to fall to a remarkable US$38 per barrel by 2028, Suncor offers investors a rare and compelling combination: robust inflation protection, a structural buffer against global energy shocks, and a rapidly compounding stream of shareholder returns.

Eli Lilly (LLY NYSE)

Healthcare is more recently a core focus for our portfolios, driven by resilient structural growth, a favorable regulatory environment, and significant tailwind from artificial intelligence.

Within this leading sector, Eli Lilly (LLY) stands out as a dominant, accelerating force.

The primary engine of Lilly’s growth is its revolutionary GLP-1 franchise, featuring blockbuster treatments like Mounjaro for diabetes and Zepbound for obesity. Capturing a commanding 55 per cent of the market, this segment is growing at an incredible 73 per cent year-over-year. With the injectable GLP-1 market projected to expand from roughly US$33 billion in 2025 to US$92 billion by 2030, Lilly is perfectly positioned to capture that upside. Furthermore, their once-daily oral pill, Foundayo, is actively taking market share. It provides a more accessible alternative that still commands 90 per cent-plus margins, vastly expanding their total addressable market as Medicare programs increasingly support GLP-1 usage.

Beyond its current offerings, Lilly boasts a robust pipeline of over 100 clinical-stage drugs. The crown jewel is Retatrutide, a next-generation “triple agonist” expected to hit the market next year. By targeting three distinct hormones—compared to competitor Novo Nordisk’s one—it promises unmatched efficacy and significant premium pricing power.

What truly solidifies Lilly as a “good, getting better” revaluation candidate is its aggressive integration of artificial intelligence (AI). Partnering with Nvidia to build “LillyPod”—the largest supercomputer in the pharma industry—Lilly uses AI to rapidly design molecules and engineer proteins. This technology cuts two to three years off traditional clinical development times, significantly reducing costs while dramatically accelerating life-changing medical breakthroughs.