Sometimes, the best way to pick stocks is by starting at the top.
That’s the view from longtime BNN Bloomberg guest John Zechner, whose investment strategy begins by looking at the economy. And right now, the signals suggest to him it’s worth picking more defensive stocks.
We caught up with Zechner in the latest episode of Ticker Take for an early look at his portfolio picks for 2027. Zechner, chairman of J. Zechner Associates, said he’s leaning into companies that should manage well, even if economic uncertainty picks up.
Zechner’s perspective is always worth a listen. Not only has he shared astute picks for more than two decades on BNN Bloomberg, two of his picks on Ticker Take have been star performers. He singled out Celestica in 2024 before its monster run. And this year, he was early to call the MDA Space advance.
But both of those picks were still influenced by how much risk the market was in the mood to absorb. It’s a key ingredient to Zechner’s investing blueprint.
He manages money for wealthy families and constantly assesses how much client money should be in stocks versus bonds or cash. To answer that, he grades the market on a scorecard.
Zechner looks at five things: the economy, interest rates, company profits, how expensive stocks are, and how investors feel. Each one gets a score, and together they add up to a single reading that runs from minus 10 at its most bearish to plus 10 at its most bullish. It has a decent track record. It read plus 7 near the market bottom in March 2009, and minus 4 in October 2018, just before stocks dropped hard.
Today, it’s sitting around minus three, which leans bearish. What worries Zechner most is that the strong economy and strong profits are riding on the AI spending boom, which he thinks is narrow and starting to slow. He also sees investors as too optimistic, coupled with stocks being expensive. A minus three does not mean sell everything and run for the hills. It means playing defence: cheaper stocks, bigger dividends, and businesses that hold up even when the economy slows.
Here are the five stocks he likes heading into 2027. As always, this is not financial advice.
Microsoft (MSFT)
Zechner wants to stay in technology, but only where he feels good about the price and the growth, and Microsoft fits. Windows still runs most of the world’s computers, its Azure cloud business is growing more than 40 per cent a year, and Copilot is spreading inside big companies. Once a company is on Microsoft’s software, he notes, it almost never leaves. And while some of the biggest AI spenders are burning cash, Microsoft is still making money from it, with more to come once the heavy building eases.
CAE (CAE)
CAE is best known for flight simulators and pilot training, but it’s the defence side that interests Zechner. He expects Canada and its NATO partners to spend much more on defence for years to come, and companies like CAE to win a good chunk of that work. Its defence backlog already runs at about five times a year’s revenue in that division. The commercial side, rough for a while, is turning around with better margins. That gives it two ways to grow, he says, with the stock cheap next to its own history.
Equinox Gold (EQX)
Equinox mines gold across the Americas and recently bought Orla Mining. What Zechner likes most is how little political risk comes with it: while many big miners operate in riskier spots like West Africa or Russia, most of Equinox’s mines sit in safer countries, and Orla adds Canadian ones. The stock looks cheap to him, at about five times cash flow and below the value of the gold in the ground. He’s bullish on gold in general, too, betting a weaker U.S. dollar and falling rates send more money its way.
Rogers Communications (RCI)
Canadian telecom stocks have had a rough few years, squeezed by tougher competition, slower immigration and higher interest rates. Zechner thinks the worst is over, and Rogers is his favourite of the group, mostly for its sports assets. Rogers, as most Canadians know, owns the Blue Jays and controls the company behind the Leafs and Raptors, along with their arenas and broadcast rights. With sports teams now selling for billions, he thinks Rogers can start cashing in on those assets within about a year.
Apotex (APTX)
Apotex is Canada’s biggest drugmaker, and it went public in June in the largest life-sciences IPO in Toronto Stock Exchange history. What caught Zechner’s eye is how profitable it is: the company is worth about $10 billion while throwing off roughly $1.5 billion in cash flow a year. It leads in generic drugs in Canada, it’s the only maker of generic GLP-1 weight-loss drugs there, and it’s moving into new areas. He also notes Canadian investors have gone years without a solid health-care name to buy. He expects big money to find this one, with plenty of upside, as long as you respect the legal and regulatory risks that come with the drug business.
The Ticker Take
Zechner still sees plenty of opportunities in the stock market. His scorecard just tells him to be careful, so he is leaning toward steady cash flow, dividends and reasonable prices.
Jon Erlichman is a BNN Bloomberg contributor and the host of Ticker Take on YouTube.
