The head of Canadian research at TD Securities says three of his top picks in the Canadian stock market include Brookfield Renewable Partners L.P., Canadian Imperial Bank of Commerce (CIBC) and Celestica Inc.
In an interview with BNN Bloomberg on Wednesday, Andre-Philippe Hardy said going into next year, the backdrop for the Canadian consumer is likely to be “more of the same.” He said growth has been propelled by population gains that are expected to decline amid weak business investment and productivity. However, Hardy added that as borrowing costs move lower, consumers will feel less of the burden of high interest rates.
TD Cowen released a report on Wednesday highlighting its “best ideas” within the Canadian market that are expected to perform well given the current economic backdrop.
He noted that as cloud computing providers move to build more data centres, which will consume vast amounts of energy, the electricity needs to be sourced from somewhere.
“And a lot of these companies have sustainability agendas and are looking for clean sources of power. So, Brookfield Renewable is a company that’s very, very well positioned to benefit from that increase in demand for power in general, but particularly clean power. The agreement that they’ve signed with Microsoft to power some of their data centers in 2026 to 2030 only exemplifies that,” Hardy said.
“So that’s a name that we really like, impacted by longer themes and less impacted by the consumer near term.”
Within the Canadian banking sector, Hardy said he likes CIBC as a stock pick.
“The reasons we like CIBC have been around…better than average growth in pre-tax, pre-provision earnings, they’ve had declining credit losses as U.S. real estate losses are behind, and they’re very well capitalized and in fact are starting to buy back some shares,” he said.
“As it relates to Canadian mortgages, they are a big player in Canadian mortgages. But so far, we have not seen any issues in the mortgage book as it relates to credit.”
Lastly, Hardy said he sees an upside in Celestica given the fact that cloud computing companies will have to “invest tremendously” in the infrastructure required to power AI.
“Celestica is, of course, a big supplier to that industry, and they’re very well positioned to provide networking services and the computers that these cloud platforms need to join this AI race,” he said.
