Canadian National Railway Co.’s stock has lagged in recent years, however, operating metrics are now improving, and profit margins should begin to expand as labour productivity and network fluidity strengthen.Peter Power/The Canadian Press
Even in a year stuffed full of surprises – on-and-off tariffs and a U.S. President who clamoured for a 51st state among them – steady-as-she-goes index investors made out just fine in 2025.
Total return for the S&P/TSX Composite Index TXCX was nearly 32 per cent and 18 per cent for the S&P 500 Index INX.
That made the year a challenging one for the buy side to outperform. And as we invite back our nine intrepid fund managers for their best picks for 2026 and reflection on their past recommendations, there’s evidence of that. Yet, nearly half of them offered picks this time last year that walloped the major indexes in 2025, as challenging as that may have been.
Here’s a look at how their stock picks for 2025 performed and their best advice and picks for the year ahead.
Can Canada’s economy ignite in 2026? These 14 charts illustrate our investment dilemmas
Christine Poole, president and co-chief investment officer, Davis ReaLast year’s pick: WSP Global Inc. WSP-T. 2025 return: -1.16 per cent
Several tailwinds appear supportive for equities: greater clarity around tariff policies, lower interest rates across many economies, government-led fiscal stimulus, and increased capital spending driven by artificial intelligence investment and onshoring efforts. Businesses are also in the early stages of realizing productivity improvements from integrating artificial intelligence into their operations.
Our investment philosophy emphasizes focusing on what can be controlled, specifically, and investing in financially strong, industry-leading companies trading at reasonable valuations across diverse sectors.
Top pick: WSP Global underperformed in 2025 amid concerns about the potential disruptive impact of AI on the engineering sector as well as uncertainty surrounding the company’s mergers and acquisition strategy. We believe these concerns are overstated and continue to own the stock.
My pick for 2026 is Canadian National Railway Co. CNR-T. The stock has lagged in recent years owing to inconsistent execution tied to macroeconomic softness and labour disruptions at rail and port facilities, which weighed on CN’s network volumes. However, operating metrics are now improving, and profit margins should begin to expand as labour productivity and network fluidity strengthen. Capital expenditures have normalized to industry levels and the resulting increase in free cash flow is expected to be returned to shareholders through share buybacks. Valuation is undemanding and near trough levels, and the stock provides an appealing dividend yield of 2.6 per cent.
Kim Shannon, founder and co-chief investment officer, Sionna Investment ManagersLast year’s pick: Toronto-Dominion Bank TD-T. 2025 return: +74.52 per cent
The defensive value investing approach has stealthily outperformed the S&P/TSX Composite over the past five years, since interest rates bottomed and inflation returned. We expect defensive value will continue to outperform in the foreseeable future as it has in environments with inflation above 2.5 per cent over the past century. Additionally, commodities, which are copious in the TSX, tend to outperform in inflation and this was supportive of the TSX’s return in 2025. The TSX remains materially cheaper than the S&P 500 and other global indexes, offering double the dividend yield, and cheaper price-to-earnings and price-to-book-value ratios, which is supportive of further outperformance.
Top pick: Methanex Corp. MX-T, a British Columbia-based company, is the world’s largest producer of methanol – a “cleaner” fuel and fuel blend that can help reduce greenhouse gas emissions and that is used globally in many industrial products. Despite having the best operating utilization in North America and better than global peers, Methanex is trading at a bargain 12 times its P/E ratio, just above book value and at half its peak price in 2016. Management is using this cash flow advantage to reduce debt and buy back its cheap stock. We believe that as the market acknowledges these improvements, this cyclical stock has the potential to double from here to $100 or better as its multiple rises to match its global chemical peer averages.
Craig Jerusalim, senior portfolio manager, CIBC Asset ManagementLast year’s pick: DRI Healthcare Trust DHT-UN-T. 2025 return: +40.55 per cent
My best advice following this exceptionally strong period for equities is to truly know what you own and to understand the sustainability of earnings and cash flows. Momentum and thematic investing have paved over many mistakes, but quality attributes should return to focus in 2026 and fundamentals should re-emerge as the deciding factor for returns.
Top pick: Last year, DRI Healthcare was a rare non-resource selection that significantly outperformed the market. While DRI remains a high-conviction, long-term core holding owing to the reliability and growth of its royalty cash flows, we believe our current top pick, Trisura Group Ltd. TSU-T, offers even greater upside potential. Trisura is a specialty insurer that is experiencing robust growth on both sides of the border, and that consistently delivers high returns on equity while gaining market share. Despite its impressive performance, Trisura trades at a substantial discount to its peers – less than 12 times forward earnings and under two times book value – reflecting a compelling valuation opportunity. As Trisura continues to report strong quarterly results and market sentiment improves, we anticipate a rerating commensurate with exceptional operational and financial performance.
Stan Wong, portfolio manager and senior wealth adviser, Scotia Wealth ManagementLast year’s pick: Alphabet Inc. GOOGL-Q. 2025 return: +65.78 per cent
Continuing shifts in monetary policy, a potentially contentious renegotiation of the United States-Mexico-Canada Agreement on trade and the U.S. midterm elections later this year may all contribute to episodes of volatility. Still, U.S. economic conditions remain broadly supportive: inflation is largely under control, the labour market remains resilient and earnings of S&P 500 companies are expected to grow by roughly 13 per cent this year. Ample liquidity – reflected in more than US$7.6-trillion sitting in U.S. money-market assets – also provides potential support as investors may begin to redeploy cash into risk assets. In this environment, the most effective approach is to stay disciplined: Emphasize high-quality companies with strong balance sheets, durable earnings growth and leading return-on-capital metrics. Volatility often creates opportunities for patient, well-positioned investors.
Top pick: For 2026, one of my top equity picks is Taiwan Semiconductor Manufacturing Co. TSMC, ADR: TSM-N, the critical backbone of global AI and advanced computing. As the world’s leading producer of advanced chips, TSMC supplies core components to industry giants that include Apple Inc., Nvidia Corp., Broadcom Inc. and Advanced Micro Devices Inc. With the advanced semiconductor market expected to more than quadruple to more than US$1.2-trillion by 2030, the company is exceptionally well positioned to capture this accelerating demand. Earnings growth is also set to strengthen, with TSMC forecast to deliver more than 25-per-cent annualized gains in earnings per share over the next several years as its three-nanometre and upcoming two-nanometre technologies scale. Last year’s pick, Alphabet, remains a high-quality AI leader and delivered strong performance. TSMC builds on that theme, offering a complementary, high-conviction opportunity at the centre of the semiconductor ecosystem.
Ken O’Kennedy, chief investment officer, Dixon Mitchell Investment CounselLast year’s pick: Intercontinental Exchange Inc. ICE-N. 2025 return: +9.98 per cent
High valuations in the U.S. bolster the argument for going global, with valuations, rising stimulus and shareholder reforms increasing the attractiveness of foreign markets. AI is dominating headlines, and while it represents a transformative platform shift, that shift is also being fuelled by unprecedented capital spending. Not all participants in the space will be winners, and investors should pay close attention to company spending commitments and debt accumulation. Cyclical sectors may benefit from stimulative measures in the U.S. administration’s One Big Beautiful Bill Act and consumer spending could be boosted by promised “tariff rebate cheques.”
Top pick: Microsoft Corp. MSFT-Q sits at the centre of the AI boom, and few companies have its reach or credibility. With software embedded in daily life and Azure powering the world’s AI backbone, adoption is happening at massive scale. Microsoft chief executive officer Satya Nadella’s leadership keeps the company’s execution share and capital discipline intact. At current levels, we see an attractive reward-to-risk profile given Microsoft’s durable cash flows, leading AI position and ability to commercialize new technology across its ecosystem.
Denis Taillefer, senior portfolio manager, Caldwell Investment ManagementLast year’s pick: Vertiv Holdings Co. VRT-N. 2025 return: +42.76 per cent
Following three years of exceptionally strong performance in the S&P 500, we anticipate elevated valuations will serve as a headwind, leading to a more subdued high single-digit return profile in 2026. We are, however, encouraged by signs of expanding market breadth across the U.S. and Canadian stock markets, which signals potential for new sector leadership. We are particularly encouraged by the growing opportunity set in the small and mid-cap segments of the markets, especially within Canada.
Top pick: Major Drilling Group International Inc. MDI-T is a global leader that specializes in contract drilling services for the mining and mineral exploration industry. After several years characterized by subdued exploration spending, the outlook for mining capital expenditures has significantly improved. This revival is driven by a powerful confluence of factors: elevated commodity prices (across base and precious metals), mining companies possessing healthy balance sheets and significant free cash flow, and strong secular demand tailwinds from the global energy transition and AI infrastructure buildout, together with the critical need to secure strategic mineral supply. We are observing senior mining companies increasing their exploration budgets year-over-year, alongside a much-needed pickup in financing activity for junior mining companies. MDI is uniquely positioned to benefit from this substantial increase in sector spending. The resultant surge in demand is expected to translate directly into a significant pickup in utilization rates, which, given the specialized and high fixed-cost nature of the business, should drive substantial margin expansion and superior earnings growth.
Laura Lau, chief investment officer, Brompton FundsLast year’s pick: Automatic Data Processing Inc. ADP-Q. 2025 return: -9.97 per cent
When the U.S. Federal Reserve cuts interest rates, equities tend to outperform, especially if there is no recession. We anticipate economic growth will accelerate in 2026, driven by lower interest rates, the fiscal stimulus of the One Big Beautiful Bill and increased trade certainty. Markets are driven by earnings, which we expect to be strong across many sectors and regions, broadening beyond the Magnificent Seven tech stocks. With lower valuations and improving earnings profiles, we see better risk-reward opportunities outside megacap tech stocks. There will be volatility, with the normal seasonality exacerbated by the four-year U.S. presidential cycle, given that the second year of an administration is typically the weakest year in this cycle. Stay invested and buy stocks outside of the largest tech companies on dips.
Top pick: My top pick is Citigroup Inc. C-N, which we believe is the top beneficiary of sweeping changes in the U.S. banking industry. Lower capital requirements, regulatory relief and a favourable capital markets cycle are expected to bolster the bank’s position, while expense efficiencies, particularly through AI adoption, add further upside. Earnings per share are forecast to grow more than 25 per cent in 2026. The board authorized a multiyear US$20-billion stock buyback in 2025. If regulatory reforms progress as anticipated, Citigroup could buy back more than 10 per cent of its shares over the next year. With the stock trading below forecasted book value, these buybacks are expected to be highly accretive for shareholders.
Anish Chopra, managing director, Portfolio Management Corp.Last year’s pick: Emera Inc. EMA-T. 2025 return: +31.30 per cent
Portfolio positioning should emphasize resilience, cash flow quality and valuation discipline. Portfolios should balance high-quality equities with dependable balance sheets, pricing power and recurring revenue, alongside fixed income and cash equivalents for stability and flexibility. Income reliability and downside protection matter more than aggressive growth assumptions. In this environment, companies that have reset expectations and strengthened their cash flow coverage, and that trade at discounted valuations, offer attractive risk-adjusted potential.
Top pick: BCE Inc. BCE-T After reducing its dividend in May, 2025, the company addressed an unsustainable payout that had been straining cash flow and undermining investor confidence. While unpopular, the decision materially lowered financial risk and restored balance-sheet flexibility. Expectations for BCE are now far more modest, and competitive pressures in the Canadian telecom market appear less aggressive than in recent years. With capital spending moderating and management focused on financial discipline, the investment case does not depend on strong growth. Trading at depressed valuation levels and offering an attractive income stream supported by improved cash flow visibility, BCE fits well within a portfolio focused on stability, income and mean-reversion potential.
Jason Del Vicario, portfolio manager, and Steven Chen, analyst, at Hillside Wealth | iA Private Wealth Inc.Last year’s pick: Evolution AB EVGGF (EVO in Sweden). 2025 return: -22.57 per cent
Our advice: Portfolio positioning is timeless. We recommend holding a concentrated portfolio (15 to 25 names) of exclusively high-quality businesses acquired at favourable prices and held for the long term.
Top pick: Our pick for 2026 is Plover Bay Technologies Ltd. PBTDF (1523 in Hong Kong). The company is based in Hong Kong, but it has global reach and customers, and it designs and markets hardware and software for defined Wide Area Network routers. Plover Bay is owned and run by its founder, has a history of generating strong returns on invested capital, is asset light, has no debt and pays most of its profits out as dividends. We have owned the stock since 2021.
All our recent picks (2023: Constellation Software Inc.; 2024: Calnex Solutions PLC; 2025: Evolution AB) saw their share prices struggle during 2025. However, true to our long-term focus, we remain shareholders in all three. Evolution, an online gaming provider, has chosen to take a step back in its progress and put a greater focus on regulated markets. Its margins for EBITDA (earnings before interest, taxes, depreciation and amortization) remain north of 65 per cent, it pays a healthy dividend and it continues to repurchase shares. Evolution is the clear market leader, and we remain confident long-term focused investors will be well rewarded.
2025 figures are total returns and based on Morningstar data.
See their picks and portfolio advice from last year here