Brianne Gardner, senior wealth manager at Velocity Investment Partners, Raymond James
FOCUS: Canadian and U.S. large caps
Top Picks: Meta, Costco, Eli Lilly
MARKET OUTLOOK:
Trade uncertainty leads to profit uncertainty, which is why the markets have been all over the place lately—one day up, the next day down. The S&P 500 Index slipped into correction territory, falling 10 per cent, while the Nasdaq took an even bigger hit, down 14 per cent. The S&P/TSX Composite Index has held up slightly better but is still down about 6.5 per cent. It’s been a rough stretch, but these pullbacks are part of the market cycle. Historically, they happen one to three times a year, even if they don’t feel great in the moment. Several factors are behind this market pullback. Concern about economic growth is leading to recessionary fears again as consumer spending is softening, and businesses are holding off on big decisions due to tariff and policy uncertainty. The rotation from big-tech and the Magnificent Seven into other sectors and geographic areas is well underway. Not everything is getting dragged down. Investors with diversified portfolios have seen some bright spots. Bonds have outperformed stocks as investors shift toward safer assets. In Canada, materials, especially gold stocks, have been strong. Even international markets, especially Europe and China, are up eight to 10 per cent this year.
Despite the volatility, there’s still no clear sign of a deep bear market or recession. Instead, this looks like a necessary reset after a long rally. For long-term investors, these dips offer a chance to rebalance, add quality investments, and ensure portfolios remain well-positioned for whatever comes next.
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TOP PICKS:
META PLATFORMS (META NASD)
Meta’s three billion daily users fuel its ad-driven revenue, with sales still projected to grow 15 per cent in 2025 as digital ad spending on the rise. AI is improving feeds and video recommendations, boosting engagement and ad impressions on Facebook and Instagram, though we note ad price growth has slightly moderated. Investments in AI, business messaging, and the metaverse persist, with Llama AI models showing early monetization promise despite high costs. Last year’s $91 billion operating cash flow supports buybacks and a modest dividend, though capital spending remains a focus even amid metaverse skepticism. We have an $800 target (37 per cent upside), but recent market volatility might temper near-term gains.
COSTCO (COST NASD)
Costco’s stability shines in any economy, driven by 78 million loyal members with over 90 per cent renewal rates, anchoring its subscription revenue. Sales rose 5.9 per cent last year and 9.1 per cent in the latest quarter, fueled by shoppers seeking bulk savings. Profitability is climbing with e-commerce, Kirkland Signature, and advertising gains, while 25-30 new stores annually near a 900-store total, including expansion in China. Earnings per share are expected to grow nine per cent in both 2025 and 2026. Our target of $1,070 implies nearly 20 per cent upside potential.
ELI LILLY (LLY NYSE)
We like the healthcare sector for its value and defensive nature – as shown by the 6.5 per cent gain year to date. From a value perspective, the forward price to earnings (P/E) ratio of 19.5 is below the S&P 500’s forward P/E of 22, meaning it’s a little less expensive relative to 2025 expected profitability. Eli Lilly is one of our top picks in healthcare. Its diabetes and obesity drugs drive sales, though we noted there are supply constraints for weight-loss treatments. Its new FDA-approved Alzheimer’s drug is on pace for $500 million in 2025 revenue, and new drugs for cancer, skin conditions, and ulcerative colitis further boost earnings growth forecasts. A target of $1,025 (25 per cent upside) reflects confidence, tempered by competition in obesity treatments.
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| META | Y | Y | Y |
| COST | Y | Y | Y |
| LLY | Y | Y | Y |
PAST PICKS: MARCH 10, 2023
MICROSOFT (MSFT NASD)
- Then: US$248.59
- Now: US$384.97
- Return: 55%
- Total Return: 57%
ENBRIDGE (ENG TSX)
- Then: $52.36
- Now: $62.28
- Return: 19%
- Total Return: 33%
WEATON PRECIOUS METALS (WPM TSX)
- Then: $55.95
- Now: $107.26
- Return: 92%
- Total Return: 95%
Total Return Average: 62%
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| MSFT NASD | Y | Y | Y |
| ENB TSX | Y | Y | Y |
| WPM TSX | Y | Y | Y |
