Market Call: David Burrows' outlook on North American Large Caps (June 3, 2026)

追加: 2026-06-03

[00:00:09]Thanks for joining us today on Market Col. I'm Mela Fernandez. David Burroughs will be with us on the show. Chairman and CEO at Barometer Capital Management.

[00:00:17]He'll take your questions on North American large caps. And here is how to reach us today. Call us toll-free at [music] 1855 3266266.

[00:00:27]You can also send your questions for David to one uh market call, [music] excuse me, at bnubber.ca.

[00:00:33]Going to start here with a quick market check and [music] see where we are so far on the day. Remember, we had record closes yesterday for both the TSX, the S&P, and actually the NASDAQ as well, but all are in the red to start the day today. So, the TSX down 182 points, about half of a percent. Uh there are some gains on energy, but miners seem to be losing today in Toronto. The SNP down 41 points or about 6 of 1% so far in the day and then the NASDAQ composite down 215 points up.8% 8% all had been rallying of course lately on AI tech stocks doing really well earnings reports coming out that were strong but there's always that overriding concern about inflation and oil last time we looked was just still under $100 with things constantly changing in the US and Iran conflict. So West Texas Intermediate this is July contract it is up 2.4% 4% we'll say or $222. So 95.98.

[00:01:38]So again uh still under the $100 mark which it has been for a little bit of time. But there are concerns that oil will continue to stay higher even if the straight of Hormuz does reopen because it'll take a long time for things to get back to normal, for the straight to reopen, to be cleared of any dangers and for any infrastructure damage uh to be fixed as well as the backup of tankers in the area which could be a problem as well.

[00:02:08]Sus St. Marie, Ontario is looking for solutions to fight back against UF tariffs. It's home to Aloma Steel, of course, a big steel maker in the country. CTV's Adrien Gobriel has more.

[00:02:20]Along the shore of the St. Mary's River sits a northern Ontario city that's been propped up by the steel industry for more than a century. Though in recent months, the foundation of Sue St. Mary's economy has been forced to bend. though it hasn't broken just yet.

[00:02:34]>> It's bent and it's bent pretty pretty sharply.

[00:02:37]>> 50% US tariffs forced the city's largest employer, Aloma Steel, to accelerate their plans to pivot to electric steel making. In December, the company announced roughly 1,000 workers would lose their jobs, the largest layoff in Al's more than 125 year history. Here in Sous St. Marie, the local economy is already struggling here on this main strip. The theater's been boarded up.

[00:03:00]Same with appliance stores and laundry mats. And there's a fear that the layoffs at Al might make matters even worse.

[00:03:07]>> The huge impact will be when EI starts running up.

[00:03:11]>> Michael Depat spent 56 years at Al Steel. He now represents more than 1,200 workers as union president.

[00:03:18]>> You believe diversifying from the US is the only way forward for Al Steel.

[00:03:23]>> We need to develop our own economy, right? We can't be vassels of the United States. South Korean ship builder Hana has pledged to invest in Alma and use the company's steel to manufacture new armored vehicles in Canada if the bid is selected by Ottawa to deliver 12 new submarines for the Canadian Navy.

[00:03:42]>> Frankly, we think that the bid that benefits uh our community is the bid that should be selected.

[00:03:48]>> There are other potential bright spots in the Sue's steel industry.

[00:03:52]>> We're fighting back. A joint $300 million public private investment across town will see Tanerys expand its steel pipe production and add to its 800 person workforce.

[00:04:02]>> For Tenerys, it's all about doubling down on domestic production.

[00:04:05]>> We are devoting more and more of our domestic production for Canada. Uh so our exposure to the tariffs is going down uh to the extent that hopefully in a couple of months it will be going almost down to to zero.

[00:04:18]>> With steely determination, those who call Sue St. Marie home are pressing forward. The investments here at Tanerys will create 200 new jobs and hundreds of other spin-off positions over the next 3 years. Good news for a resilient steel city. Adrian Goel, CTV News Sue St. Marie.

[00:04:39]>> All right, a quick break, but David Burroughs will join us. He's with Barometer Capital Management. He joins us after the break to take your questions on North American large caps.

[00:04:47]We're back in just a moment.

[00:04:56]>> [music] >> Welcome back to market call. David Burroughs of Barometer Capital Management is joining us today to take your questions. David, good to see you.

[00:05:11]>> Great to see you.

[00:05:12]>> Let's talk a little bit about where your focus is to uh these days. Is it more on AI equities? Is it more on inflation uh hit sectors? What are you looking at?

[00:05:21]>> Yeah, look, I think that everybody has their eye on what's going on in AI. It's a major transformation and there's obviously enormous potential.

[00:05:32]Valuations [clears throat] aren't lost on anyone. They're very high and and the market is quite concentrated in these stocks. Um so we're there. Uh but that being said, we're in a market where there are other leadership teams and most of them are sectors that either benefit or provide a hedge against inflation uh that have been performing well. Things that would be more disinflationary or uh reflect uh economic weakness really are nowhere to be seen. So, it's a it's a have and have not market and I think it's a market that you can be targeted and diversified in while being involved in the AI trade.

[00:06:11]>> Yeah, everybody wants to be in on that trade. Let's uh start with an email right now as far as questions go from Sophia. She says, uh, what does the guest think about Blackberry? Uh, as you know, David, Blackberry has been trying to do a bit of a turnaround. They said they've turned the corner in their last earnings and people have been buying into that. Stock has been up. Uh do you like BlackBerry? Would you would you put money in?

[00:06:34]>> Yeah, look, I mean that the technical situation, you know, has been really positive from a trading perspective. It made a turn higher and kind of march and it's been marching higher ever since.

[00:06:46]People, I think, don't understand the importance that Blackberry's software has in applications that can't afford to fail. And so their their their platform has really been well utilized by the automotive industry.

[00:07:01]uh because cars are becoming more and more sophisticated uh and smarter and BlackBerry's been uh been important in that role. So um you know the stock has extended. It's it's had a a massive run.

[00:07:14]It's run from sort of $3 to $10 uh over the last short while. It's obviously a very different comp company than people remember it as being. Um but it's uh the company's generating cash uh and um certainly they're they're generating some growth. Uh and if you look at the basing that the that the chart went through uh when it eventually broke out kind of around uh uh $67, uh it's been on a tear ever since. So it's one of the more speculative plays, but I can understand why people are interested. It's uh you know it's a $6 billion market cap and and uh and it's um it's it's in an important growing area.

[00:07:57]>> Okay, let's go to the phone line then.

[00:07:59]We have Gordon on the line. He's in Victoria, BC with a question. Gordon, go ahead.

[00:08:04]>> Good morning. Um I hold Brookfield Renewables and I'm up quite a bit. um problem that I have is that the constant shuffling of assets that goes on with Brookfield going back to the Edburgh Brascan days and uh the fact that the distribution isn't covered by the free cash flow. It's a lot of it is the recycling of assets which I don't really like that model. Should I harvest my profits and move on?

[00:08:29]>> Thank you for the question.

[00:08:30]>> So, so, so let's just start. I mean that the renewable space and the clean energy space is having a a really nice run so far in 2026. If you look at the ETF, which includes, you know, companies like Brookfield Renewable, um it's it's performing remarkably well, you know, well outperforming carbon-based energy.

[00:08:53]Um so um strong group um within the group you know wind and solar companies doing particularly well. I share your concern about sort of the lack of transparency in the way that transactions take place inside Brookfield Renewable. Um you know they when they reported most recently they did disappoint a little bit on the revenue side. Um so you got to you got to keep that in mind but they are growing you know growing very nicely. Uh and um they have uh they have a very strong liquidity position. They've got close to $5 billion in liquidity. Um and um uh this is a space that people are interested in and certainly there's no shortage of demand for power. So it it it may not be my number one choice in the space. I actually own the ICLN uh which which gives me a basket. Um but um I wouldn't say don't buy it. Uh it's it's in a strong space and and will capitalize.

[00:09:56]>> Okay, let's move on to the next caller.

[00:09:58]Uh Paul in Edmonton with a question.

[00:10:00]Paul, go ahead.

[00:10:02]>> Hello. Yes, I own some Resources. Do you think we should sell it here today at today's price? And if so, do you have any recommendations about where we should place the proceeds? Thank you for the question. So, Arc Resources, David, you know, being bought by Shell. People have been asking, do we get out before that happens or should we hang on?

[00:10:20]What's what's usually better?

[00:10:23]>> Yeah, look, um, the energy, we like energy. We have about 17% firmwide assets in energy. We own largely large cap names. You know, we own Suncor and CNQ and Imperial. We own a couple other names, one I'll talk about today. Um, you know, there's uh there's some some safety in the arbitrage uh waiting for Shell, but I I think that I would move on. There's not much more upside in it, I don't think. Uh, and I think that you probably could be repositioning. Uh, and I'll I'll give you an idea today.

[00:10:57]>> That would be in top picks, which is coming up later. Let's take a quick break. Uh, David Burroughs uh staying with us. He's with Barometer Capital [music] Management to take your questions on North American large caps.

[00:11:07]Back in a moment.

[00:11:14]Welcome back to Market Call. William is on the line. He's in London, Ontario. He has a question today for David. Uh William, go ahead.

[00:11:20]>> Uh good afternoon. I've done very well with Enbridge and I'm thinking of selling it and [clears throat] buying something else. What would you suggest?

[00:11:27]Keep Nbridge or buy something else? And what would that something else be?

[00:11:31]>> All right, David Bur, it feels like people want you to give up your top picks early. Uh but what are you thinking about whether to hold Nbridge?

[00:11:38]>> Look, you know, uh we like Enbridge. Um it's performing really well. We think that this is a a great business that they're in. It's an incredibly strong management team. They're very disciplined in [clears throat] the metrics that they follow and in the investments that they make. Uh you know, you're getting paid a 5% yield. the the the only negative I would say is in general high dividend paying lower growth securities uh are are are not leading this market.

[00:12:11]Enbridge you know is a bit of an anomaly in its space. Um but from riskreward perspective we like it. We own it. uh and we've owned it for a while and yeah, it's up a bunch, but I think that the energy sector is relatively early on in a longer term buff phase and and um uh I think that you get some inflation protection. You get a nice yield and total return should be pretty darn pretty darn good.

[00:12:37]>> Okay, let's go to an email then from Jazz. Uh your thoughts on MDA. Uh is the present price a good entry point? I haven't looked at M MDA space for a while. It's been up and down. uh but has done well I know in the last month or two. So let's have a look at where it lands today. Uh it's a 5629. It has a bit of a runup here since the end of last year. Uh David, would you put new money in today for MDA space?

[00:13:02]>> Yeah. So we we think that you know the space industry is very early days and MDA is a way that you can participate you know through through the Canadian market.

[00:13:13]um it has been prone to some disappointments and it was more around you know what happened in their some of the satellite contracts um due to M&A I you know I I we like it um I think that uh the down the risk is that we have this giant IPO coming in SpaceX and of course there's a lot of euphoria around the group but there have been uh like 20 space ET FS launched and they're all going to need positions outside of SpaceX and so the demand side is probably pretty strong here. So, um, as a proxy on the group, uh, I have no problem owning the stock. Uh just uh further that question because as you mentioned SpaceX is going to gobble up so much uh of the energy in that space and the interest in that space. Would MDA space a company like that sort of benefit from the overall mood of investors who want to get in on the space or would it u sort of go the other way just because all of the attention and energyy's on SpaceX?

[00:14:18]>> Yeah. So, if you think about it, those people that are buying the space-based ETFs to get exposure are creating demand for other companies in the group. It's unlikely that anybody is going to raise enough money from the small companies that are there already to fund purchases of SpaceX. I think it's more likely that they're going to be taking money from other mega cap technology companies. uh and money will funnel into the ETFs that then why by nature will create demand for other companies in the space industry ecosystem.

[00:14:54]>> Okay, so could float up. Let's go to our next caller then. Uh Ron's on the line.

[00:14:58]He's in Calgary. Ron, go ahead.

[00:15:00]>> Yes. Hi, I'm calling. Thanks for taking my call. I'm calling about Fairfax Financial and they own part of a little bit of Blackberry about 25 million shares right now, but they were had been selling it recently.

[00:15:18]Uh but they said they're going to hold uh with what they have right now. But um um I know it's mainly in an insurance play and um it's a lot like Berkshire Hathaway in that respect.

[00:15:36]Could do you have give me any thoughts on it?

[00:15:39]>> Okay, thank you for thank you for the question. David, go ahead.

[00:15:42]>> So So for folks that that have watched over time, you know, I like to highlight that between 70 and 80% of return that comes in an equity comes from being in the right neighborhood.

[00:15:51]And you can have a great house in a bad neighborhood and not make money. We think Fairfax is a great business. In fact, you know, we owned it for years until we came out of it a few months ago. Uh the truth is though that property and casualty companies have been under pressure. Uh for 2 three years, premiums were very hard, meaning they were able to put through pretty significant price increases on policies.

[00:16:16]Uh and that is less the case currently.

[00:16:19]They're also an investment an investment vehicle and Fairfax has done a great job in managing their investments and you're referencing that with Blackberry. Um, but right now you have a sector that's under pressure and virtually everybody is under some pressure. Berkshire is under some pressure. Progressives under pressure. So I think it's just um not the right time to be adding a position here.

[00:16:42]>> Let's move on to the next caller then.

[00:16:44]Frank is in St. John's, Newfoundland. Uh Frank, go ahead.

[00:16:48]Frank, are you there?

[00:16:51]>> Okay, I think we may have lost Frank, but I think his question was about Atkins Realis. I'm gonna pinch it here.

[00:16:56]Atkins realis uh has been sort of going sideways uh if anything. And I think there was expectation that this stock would do much better in the climate where there's going to be buildout uh in Canada and other countries in the world for AI and that this is the company that would benefit uh from that. uh as you can see the stock is quite down over sort of last month of May. Is there anything weighing on Atkinsalis uh that you see David?

[00:17:25]>> Yeah, look in general in general some of the engineering companies have been under pressure. They had a tremendous run. I mean Atkins Realis ran from $20 to 110. So it's up five times over the course of sort of 22 through 26. Uh so it it makes some sense that it's resting and the and the group is resting frankly. um relative strength started to weaken in uh June of last year and it's basically traded um about as well as the bottom 19% of stocks in the S&P.

[00:18:00]So, uh it's a lagard. Uh when you're in a bull market, you want to take advantage of it. You want to own things people really care about. uh we're trying to be very very selective and carve out underperformers quickly frankly because you know in a midterm election year you tend to have weakness in June, July and August. Uh and we'll see whether that happens or not but right now the market breadth is not ideal. So we're trying to be very very cautious. So um I I don't think that this is one I would would be purchasing currently. I think I'd uh I'd wait for a better opportunity.

[00:18:33]>> Well, let's get to a quick break then.

[00:18:35]We will come back with past picks from David Burroughs in just a moment.

[00:18:44][music] [music] Welcome back to market call. We have past picks from David Burroughs from July 17th of last year. And at the time, David, you chose GE Aerospace or GE uh in New York. It was 26028 US at the time to 31368 today. 21% upside a total return of 21%.

[00:19:12]What's been uh working well for GE aerospace >> look f first of all the aerospace sector for obvious reasons uh has been performing really really well uh GE aerospace you know benefits two ways.

[00:19:26]when they they sell engines and of course they sell maintenance uh and uh for a long time the next generation of uh engine uh was delayed and that caused increased maintenance and GE has been a beneficiary there. So there's obviously a lot of demand for uh for jets. Uh GE has great exposure across the spectrum.

[00:19:50]um they're getting great recurring revenue from the maintenance business and we've had a fair bit of exposure through that sector including Halmet Aerospace which I've used as a top pick uh along the way as well and um now in the last um couple of months the the the defense stocks have come off a little bit. They've had a tremendous run.

[00:20:11]They're consolidating but but I like this business. It's a it's a dominant global business and and uh has a great opportunity for cash flow and earnings growth.

[00:20:20]>> GE Aerospace, let's get to your next pass pick from July of last year. Agniko Eagle AEM on the TSX uh was 118661 uh at the time now to 173 57. So 46% upside, 48% total return. Can I ask you uh in a sort of wider lens where you're landing on gold these days? I I imagine you've held on to Nico.

[00:20:45]>> Yeah. So, so our long-term thesis is that we started a commodity bull market three years ago. Uh and that's that's based on the fact that we're in a more inflationary world and these companies can generate really extraordinary cash flow and return capital to shareholders.

[00:21:03]Agniko is the cream of the crop. Um now in January this year we got into a parabolic increase a very sharp increase where things got very extended and we actually carved back our waitings uh expecting a 3 to fivemonth correction. If you look at previous gold bull markets they tend to come in stages. They tend to go on for a decade.

[00:21:24]So my sense is we are now sort of 3 to four months into what will be you know sort of 3 to five months of consolidation. we've come down to the long-term moving averages and we are, you know, rebuilding our weight in precious metals. I'm not sure that we're completely done that work. Um, so for for an investor who is a long-term investor, you know, I I would just buy it and hold it. Um, you know, we did come off of quite a lot of our position overall in precious metals and we've been rebuilding recently and we'll continue to over the next, you know, month or six weeks. Uh but this is the first inning or the maybe the maybe the first two or three innings of a nine-ining game and the next leg should be a very strong leg higher as well. And this sector is not wellowned. Um really none of the basic materials are wellowned. They're very small part of the S&P. Uh and so you know a lot of investors think they're irrelevant but they have the characteristics for exactly what we're looking for. These companies are going to generate really nice dividend growth over the next number of years. They're going to be a lot of share buybacks. Uh and the sector is small, so demand makes a difference.

[00:22:39]Uh as people build positions, I think prices move higher.

[00:22:42]>> Let's get to your last pick from last year in the energy space. Imperial Oil IMO on the TSX uh 11263 at the time to 17617 56 56% upside 58% total return. How much of uh this has come over the last 3 months with what is going on in the Middle East?

[00:23:04]>> Yeah, it's it's it's obviously benefiting. Um when we bought it, it was that many of these the very large cap long life asset companies were breaking out of sort of 10-year periods of consolidation and it entered new bull markets. Again, it'll go on for years in our our opinion. uh and the Canadian companies were trading at a discount. Uh that discount is starting to come out.

[00:23:29]There's international interest in Canadian companies. It's obviously benefiting from what's gone on in the Gulf. But I think for those that think that if the uh straits and for moves get solved and the energy goes right back to where it was, I think that's that's just not reality. Um countries that didn't have a reserve are going to need to build a reserve. country companies, countries that that reduce their reserves and put them into the market are going to have to replace uh and there's going to be a premium for risk.

[00:23:56]So, um you know, there's near-term news risk on some kind of a deal. I would fade that. Um I'd be a buyer of of Imperial. I'd be a buyer of CNQ. I'd be a buyer of Suncor. Again, you're going to hear a lot of these characteristics.

[00:24:13]We want companies that generate lots of cash, that don't need a lot of debt, um that have a willingness to return capital to shareholders. That's the kind of profile that will help offset inflation. Let's take a quick break. On that note, David Burroughs will be back to answer your questions in just a moment.

[00:24:39][music] Welcome back to Market Call. Kevin's on the line. He's in Kingston, Ontario, uh with a question. Kevin, go ahead.

[00:25:01]>> Hi, uh David, thank you for taking my call. Um, I uh watch uh uh BNN quite a bit and I enjoy when you are on. Um, can you please tell me about Visa and Mastercard? They're both in the same business. I've been invested in both of them for almost since their IPOs, but the last two years their charts are horrible. I've never seen their charts like that since they went public in ' 06 and '08. And there's something wrong with Visa and Mastercard. And I thought I would never say that. Thank you.

[00:25:43]>> Thank you for the question. Uh Kevin, what's weighing on uh these stocks? Is it sort of digital payments?

[00:25:50]>> Yeah. Uh so Kevin, that's a it's a it's a great question you ask. I think a lot of people are questioning these have been unassalable fortresses for a long long time. I mean really right from the IPO Visa was a just a dynamo and we owned it for a long time. Um, it it's interesting. I I do a webcast each week and we've talked a little bit about the weakness in the XLF which is the broad-based financials index or ETF in the US and you know it's a very mixed bag and in particular the card companies and and uh and fintech stocks have been weak uh along with some of the insurance stocks uh and I think it has to do with uh the concern around uh disintermediation with digital payment systems. Um there's obviously you know they have had a a real fortress around the the interchange fees that they charge uh and you know there is innovation to try and dislocate some of that. Uh so in the near term it creates some uncertainty about you know the long-term profitability. Now I think that they have a pretty dominant position um and the the the consumer is certainly not shy about using credit cards. Um but in in the near term uh I think that may basically they're they're consolidating strength. I mean uh Visa ran up from December of 22 from $175 to $375 I think at the peak. So it's off uh sort of $60 or $65 off the high. It's still trading above long-term moving average. It's just it's just lagging in this market.

[00:27:26]And if you think about inflation protection, it's it's not that well inflation protected. Um, so it's it's hard for them to put prices up. You know, supposedly uh they were going to all volunteer to drop the interest rate on the on the cards and that's obviously not happening at the bank level. So, um I I just think there's other places to focus.

[00:27:51]>> Let's move on to an email then. David, uh this is from Long. says, "Would your guest outline his views on Lumen as a long-term hold?" Uh, what can you tell me about Lumen?

[00:28:02]>> Yeah, so I have to be honest. I don't I don't spend a lot of time on uh on Lumen, so I I I'm I'm going to sort of step aside in this one. I apologize.

[00:28:11]It's not one I can give a good answer on.

[00:28:13]>> Okay, let's get to the next caller then.

[00:28:14]Uh Freda is on the line. She's in Chilowak. Freda, go ahead.

[00:28:18]>> Hi there. I'm interested in Aabaska oil and your opinion as it has long long reserves and a good future for Canada.

[00:28:28]What do you think?

[00:28:30]>> Okay, thank you for the question. Go ahead.

[00:28:32]>> Well, as I mentioned earlier, we really like the oil sands companies. We think that they're in the process of being revalued positively, which means, you know, as the earnings grow and the cash flow grows, if the multiple that investors are prepared to pay is growing at the same time, that's what makes a bull market. Uh and these companies are are all growing their their revenues. Um all of these companies including Atabaska are returning capital to their shareholders. At theabaska is committed to return 100% of its free cash flow uh back to back to investors. Um so I think it's I think it's a very interesting company. I mean um they're they're reducing the share count. They're increasing their their production.

[00:29:16]They're on schedule to to hit 40,000 barrels a day by late 2027.

[00:29:22]It's a little bit more aggressive way to play the oil sands. Uh stocks behaving really well and and I think it's a it's a it's a good way to participate.

[00:29:30]>> All right, that was for Freda. Let's get to uh one last caller on the block. John on the line in Ashawa, Ontario. John, go ahead.

[00:29:38]>> Well, hi Morela and thank you for taking my call. Mr. Burrows, welcome back with stellar reports on the previous uh picks. Thank you. My question is on Microsoft. Is it still in the limbo or is it now on the way uh for better earnings uh as we look at the next uh couple of quarters and beyond. Thank you. Thank you.

[00:30:03]>> Thanks, John. Uh Microsoft Mag 7, where are you landing on Microsoft which is kind of lagg behind some of the others?

[00:30:10]Is that still on software [clears throat] concern, David?

[00:30:12]>> Yeah, we we we have really no software exposure. Um our our exposure and to to put it in context, we're about 13% technology across the firm and that's obviously a significant underweight. So we're we're really targeted right now.

[00:30:28]And and we we do own Nvidia and we do own uh Lamb Research and and um um I I think I think you have to pick your spots. We look at the semis as the equivalent of copper and what copper has represented over time as a call on the economy right and it's an inflation asset because as demand is strong you know uh and strengthens you can put your prices up tomorrow defend a great margin and have inflation protection the software companies I think are in a trickier spot because some of their businesses may be under under some u pressure going forward with aentic AI to write software they're not going replace Microsoft. But the truth is they become consumers of capital. They're they're investing, you know, significantly in infrastructure to support AI. Uh and so they're going to return a little bit less cash to shareholders. Uh maybe dividend growth a little bit less, maybe share buybacks a little bit less. Uh and while they've had a bounce, all the software stocks over the last couple of months, the charts aren't that great.

[00:31:35]Um, relative strength for Microsoft's traded better than only 30% of stocks in the S&P over the last 52 weeks. Um, we're we're just staying clear of software for now.

[00:31:45]>> All right, let's take a quick break, David. We will be back with more phone calls and emails in just a moment. Stay tuned.

[00:31:57]>> Welcome back to Market Call. David Burrow is with us today to answer your questions. Uh, Jeff has written in. He he says, "I would like to hear David's s on Chener energy, uh, LG producer in the US." Thanks. Uh, do you know much about Shaneer Energy? I know they're out of Texas. What else can you tell us about them?

[00:32:13]>> So, Shaneer really are the company in the um in the trans shshipment of liqufied natural gas and they're a big beneficiary of demand coming from the rest of the world. uh they're able to buy gas at North American prices and liqufy it and sell it in the on the international stage. Obviously, given what's going on in the world energy markets, uh they've had a a pretty good geopolitical tailwind in their business, but this is a growth business and it's going to go on a while because we have lots and lots of gas in North America.

[00:32:46]Uh and uh a lot of it's trapped and so they can create value by liqufying it and and getting it out in the first quarter. They had like 200 cargo ships, 187 cargo ships uh export um um uh out of Corpus Christi. Uh and uh they're going to continue to grow their their capacity. The the risk I mean it's a very capital intensive business. So I think that they are um uh investing a lot of money uh and that then that's you know if the cost of capital goes up that that could be a headwind. In other words, if long-term interest rates go up that could be a headwind. Um but we we like the business. Uh if if there's some kind of a settlement in the straits immediately you could see a negative psychological impact uh on on the stock.

[00:33:41]Um, but technically, you know, it's it's behaved really well. Uh, it's pulled back a little bit recently from 300. So, it's down kind of kind of 20% off the highs, but basically trading above the 50-day moving average, which is rising.

[00:33:54]So, um, uh, we like it as long-term energy infrastructure.

[00:33:58]>> That was, uh, for I just missed the name here. That was for Jeff.

[00:34:04]>> Okay, let's go to Jacob. Jacob's on the line in Toronto. Jacob, go ahead.

[00:34:09]>> Hello. Good afternoon. Uh, hi.

[00:34:11]Can I ask your guest about Along Kush? It seems not going anywhere and just like to know if you add to it or just stay put with it. Do you also own it in your portfolio? Thank you very much and have a nice afternoon.

[00:34:28]>> Thank you for the question. Uh yeah, Kushtart has been really just going sideways uh for quite some time since its attempts to buy 7-Eleven uh in Japan. Uh, have you invested in Kushtart or is it one you have invested in the past?

[00:34:43]>> Yeah, we've we've we've been asked a lot of times over the last couple of years.

[00:34:46]This is a stock we owned for a long time. Uh, and when they stepped up to um to make a bid for the 7-Eleven stores, you know, I I said actually on this show, if they were able to complete it, you know, we would buy the stock in a heartbeat because they are really really good at acquiring and integrating and that would give them a long runway uh for cost improvements and revenue improvements across the system. As it is, you know, they haven't had anything significant since then. They are growing their revenues mostly recently because fuel prices have been higher that the consumer is not spending you know more money in the existing stores. They are excellent operators. Um but we in general have stayed away from the consumer. you know the consumer is is is the downside in the inflation environment unless you have something really special and we own we own Aritzia for instance uh I think it's our only consumer investment because they have something that's special and they can can expand geographically and so on until there's some other catalyst for Kushtard it's less interesting to us uh because it's it's hard to see multiple expansion Unless you have some kind of a um a major shift.

[00:36:08]>> We'll have to go to the next caller then. Jerry's on the line in Toronto.

[00:36:11]Jerry, go ahead.

[00:36:12]>> Yeah. Hi Mela and David. Um my question today is on CGI. I've held it for a very very long time. Seen it go from pretty low levels to very high levels and then right back again. Just wondering what your opinion is of it at this time. Do you own it? Um or do you think I'd be better off selling it and going somewhere else?

[00:36:32]>> Okay. Thank you for the question.

[00:36:33]Consulting information technology, we touched a little bit on this, David, but uh CGI more specifically.

[00:36:40]>> Yeah, I mean look, they they have a tremendous amount of money uh sorry a number of projects with government in the US and with with Canada uh and in central central Europe. Uh it's it's been a great company over time. you know, earnings growth has been slowing and uh so if the estimate for 26 is like 20% earnings growth, 27 is 9% earnings growth. Um so when a company has been a grower for a long period of time and growth seems to be slowing, that's when you get multiple compression. So that's the other side of revaluation. You know, you get earnings growth, but multiple compression or you pay a lower number of times earnings, uh price price can move lower. And so, uh, technically the stock is a bit broken. Um, I I just think that there are other places, uh, that I would focus the capital in right now. You're in a bull market technology. You got a technology company that's performing poorly and not just like for the last couple of months, but like for the last year, uh, I think there's other things to do.

[00:37:45]>> Let's quickly get to Ron out of Edmonton with this question. Ron, go ahead.

[00:37:49]>> Oh, thanks for taking my call, David. Uh I got a tip on Alma Steel and I've been adding to it slowly and I'm wondering um what do you where you see the risks uh the future catalysts uh you and Koozma tariffs and and do you think it'll get back to its all-time highs?

[00:38:07]>> Okay, thank you for the question, Ron.

[00:38:08]That's a that's a difficult one. There's stuff there's stuff simmering, we'll say, with Alma. However, uh do you think it could recapture what it was? Well, look, you know, um, go back to my original thesis. If 70% or 80% is the sector, you know, the sector has a tailwind. If you look at the SLX ETF, and maybe you can put it on the screen, you know, made a new all-time high yesterday and the steel sector on a long-term basis uh, started making new highs about uh, 18 months ago and, you know, is performing really well. Aloma, of course, is a special situation. Uh, and it's improved recently. Stocks moved up from kind of four and change to just about $8. Uh, so, you know, they're trying to turn things around there. I'm not a big fan of turnarounds. I'd rather buy the strength than the group. Uh so you know if you look at Newor for instance you know Newore only only uh about five six weeks ago made a new all-time high and they're about the lowest cost producer and you know I just think a better business. So um I I would prefer to stay away from turnarounds there. Al Steel has been burning cash and until that starts to change I I think I would stay away. All right, let's take a quick break. We're going to come back with some new picks from David Burroughs in a moment. Stay tuned.

[00:39:43]Join us tomorrow for Market Call. Darren Sison will [music] be on the show.

[00:39:46]Partner portfolio manager Campbell Lee and Ross Investment Management taking your questions on global and technology stocks. [music] That is tomorrow. Let's get to some new top picks from David Burrow. We're going to start with Bombard BBD.B on the TSX. What do you like about Bon Bombarj uh in the future?

[00:40:04]>> Well, let's let's start with the fact that it's in the right industry. Uh aerospace is a is a a great and growing industry uh with large business opportunities. Um we don't like to buy turnaround situations. We like to buy companies that are good getting better uh where there are catalysts for positive change. So um they already went through a period where they paid down debt uh and became really a pure play uh business jet leader uh with now has a a dynamite balance sheet uh and all that's fully reflected in the financials. So it's not that it's a turnaround, it's that their businesses really are lifting that you know jet delivery growth is strong. Uh their margins are expanding.

[00:40:50]They have a lot of optionality given their strong balance sheet and like to give you an idea their their book to bill in other words their new order book grew 43% over the past year their book to bill was 3.6 times. So for every dollar they delivered they got $3.6 in new orders.

[00:41:11]Uh so that's solid. They had a 25% year-over-year increase in their services and uh they're going to generate a billion dollars in cash in 2026. So, um they're winning. Uh now, uh for future catalysts, um they they it looks like they'll get an order from NATO for for 10 to 12 Global Eye aircraft which are being used for uh sort of airborne early warning. Uh they got an order from the Canadian government of Canada on the same plane.

[00:41:43]So, um, we think that there's a lot of things that that can, uh, add to the story as we go along, uh, and the multiple can continue to expand alongside it.

[00:41:54]>> Okay, let's get to your next pick, which is BHP Group, BHP, uh, out of New York.

[00:41:59]Uh, I think I remember you recommending this once before. What do you like about BHP or what do you still like about it?

[00:42:05]Yeah. So, so we like cash generating resource producers because they are great from an inflation protection perspective. They've all gone through major deleveraging and taken debt down uh in their on their on their balance sheets. BHP is the largest producer of iron ore on the planet. Uh roughly 45% of their revenues comes from iron ore.

[00:42:27]And the reason it's only 45% is they've been taking their excess cash and adding copper production. So their copper production was up 28% over the last 3 years and is now 44% of revenue. So a lot of the iron ore is produced in Australia, gets sold into Asia. Um they are fully integrated. They own the mines, the rails that they ship on, the ports that they ship out of. Uh and uh so it's a very integrated diversified uh basic materials producer that will be a great dividend payer and will be great at returning capital to shareholders and if there's inflation we're going to benefit from it.

[00:43:05]>> Let's quickly get to your last pick then which is uh beat on energy tamarak valley energy TV on the TSX. You've talked uh during the show about how much you like energy right now. What is it about Tamarak Valley specifically that you're looking at?

[00:43:20]>> So, so outside of the the the large um oil sands companies that we own and and you know, we're not really going down that the quality scale. We're staying right with the highest quality. We do have exposure to a couple of companies in the clear water uh companies that are using water flood technology to pick up uh their production and um uh Tamarak Valley is is generating great growth in production. Uh they're expecting uh uh about 15% production growth uh in the next half and uh expanding water flood.

[00:43:57]They're looking for 60,000 uh barrels a day by year end and that means that they're generating a lot of cash. So, um you know, they're they're going to continue to increase their dividend.

[00:44:10]They just recently increased their dividend by 25%. Uh they're increasing their share buybacks. Uh and um again, international investors are coming back to Canada for some of our energy companies and we think we can see multiple expansion along with pricing power. All right, David Burroughs, good to see you, sir. Thanks for joining us today.

[00:44:29]>> Thanks for having me, Mela.

[00:44:30]>> And thank you for joining us today on Market Call. We'll see you back here again tomorrow.

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