Ernest Wong, Head of Research, Baskin Wealth Management
Focus: North American Large Caps
Top Picks: Netflix, Domino’s Pizza, Live Nation
MARKET OUTLOOK:
The Toronto Stock Exchange (TSX) is extending its 2025 performance in 2026 with gold up 18 per cent, and the energy sector is up over 20 per cent despite weak oil prices. Materials and energy are now over one third of the index, which makes the TSX increasingly driven by gold and oil sentiment. This is offset by worries about AI on the tech sector, and a soft market impacting insurers. The key catalyst for Canada will be the upcoming re-negotiation of Canada-United States-Mexico Agreement (CUSMA) in the summer, which is important for the banks, railroads, and commodities like forestry, oil, and fertilizer. We think Canada and the U.S. are both motivated to get a deal done, given the lack of alternatives for many key Canadian exports to the U.S.
The U.S. market and the economy are being driven by the top tech firms (over one third of the index), and by extension, spending on data centers and artificial intelligence, which is masking sluggish consumer and industrial activity. The performance year-to-date has been weak given concerns about the return on investment by companies like Amazon, Meta, Google, and Microsoft, as well as the potential for AI disruption in software and data-related sectors.
The current markets are highly narrative driven without distinguishing between individual companies, which provides the opportunity to use fundamental analysis to identify high-quality companies at attractive prices.
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TOP PICKS:
Netflix (NFLX NASD)
Netflix stock has been impacted by their proposed acquisition of Warner with the market concerned about the debt being raised to finance the deal, the possibility of a bidding war with Paramount, as well as the motivation for Netflix to make such a large acquisition.
We think the acquisition of Warner is misunderstood and view it as an outstanding opportunity for Netflix should it pass regulatory approval. Core fundamentals have remained solid with double digit sales and profit growth, and shares are trading at the cheapest multiple since 2022.
Domino’s Pizza (DPZ NASD)
Domino’s stock price had a rough 2025 in sympathy with the entire fast-food sector given concerns about low-income consumers, Glucagon-like peptide-1 (GLP-1) drugs, and high prices. We believe these concerns are actually tailwinds for Domino’s, given their strong franchisee profitability, integrated model and discipline on prices and promotions, which allows them to gain market share in weaker times. Domino’s is reporting strong same-store sales, franchisees are opening new stores and is gaining market share over competitors like Pizza Hut and Papa John’s.
We think shares are attractively valued at under 20 times earnings for a business that should continue to grow profits at eight to nine per cent going forward.
Live Nation (LYV NYSE)
Live Nation is the largest concert promoter in the US and also the owner of Ticketmaster. Live Nation had a very strong 2025, and expects double-digit growth in 2026 as well. We think Live Nation is very well positioned in a streaming world to capture growing demand for live events, and also the need for artists to use touring to make money and connect with their fan base. Recent regulatory developments have been positive for Live Nation both as a breakup of Ticketmaster and Live Nation is now likely off the table, while new legislation to restrict scalping, bots, and brokers will hurt secondary marketplaces more than Ticketmaster.
Shares are trading at an attractive multiple of 15 times earnings before interest, taxes, depreciation and amortization (EBITDA) given their strong tailwinds.
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| NFLX NASD | Y | N | Y |
| DPZ NASD | Y | N | Y |
| LYV NYSE | Y | N | Y |
PAST PICKS: NOV. 4, 2025
Restaurant Brands (QSR TSX)
Then: $93.31
Now: $92.72
Return: -0.63%
Total Return: 0.28%
CCL Industries (CCL.B TSX)
Then: $77.62
Now: $90.59
Return: 17%
Total Return: 17%
Constellation Software (CSU TSX)
Then: $3507.03
Now: $2414.56
Return: -31%
Total Return: -31%
Total Return Average: -5%
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| QSR TSX | Y | N | Y |
| CCL B TSX | Y | N | Y |
| CSU TSX | Y | N | Y |
