Darren Sissons’ Top Picks for Feb. 25, 2026

Darren Sissons, Partner and Portfolio Manager, Campbell, Lee & Ross Investment Management

Focus: Global and technology stocks

Top Picks: Atlas Copco AB, Automatic Data Processing, CN Rail

MARKET OUTLOOK:

2026 started strongly and like 2025 includes heightened political volatility. That volatility continues as despite the U.S. Supreme Court striking down the U.S. President’s tariffs, he doubled down imposing a 15 per cent global tariff.

Further, given the U.S. Midterm Elections in November and the prospect of the Republicans losing control of the Senate and or the House thereby creating a Lame Duck final two-year presidency, the likelihood of the White House targeting voter’s wallets to positively influence a Republican outcome is high. In 2025, wallet targeting was implemented via a seven percent budget deficit and a 13 per cent increase in defense spending. Equity markets responded positively to the fiscal stimulus as corporate profits rose, labour markets strengthened, and valuation multiples expanded. The same fiscal spend driver was implemented to a lesser degree across the globe to combat U.S. tariffs and domestic concerns. While the wealth transfer mechanism may differ somewhat in 2026, we still expect fiscal spending driven growth to remain a constant.

European defence spending will remain stimulative for European equity markets. Asia is a mixed bag as China, Asia’s centre of gravity, is not yet stimulating despite a weak domestic economy. Canada is a black box as the Canada-United States-Mexico trade agreement will be re-negotiated in first half of 2026, which could be positive or negative.

Precious metals should continue running in 2026 albeit at a slower pace. Other metals and energy are also well positioned to benefit from rising investor interest in commodity-based companies.

The artificial intelligence trade and the related software sector sell-off presents some interesting investment opportunities.

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TOP PICKS:

Atlas Copco AB (ATCOB SS)

It is the global leader in vacuum technology. Recent weakness in the semiconductor cycle provided an attractive entry point for new investors. Its dividend currently yields 1.80 per cent and has grown by an annual average of 10 per cent per annum in Canadian Dollars in the last five years or by six per cent annualized over ten years. Its tuck-in acquisition strategy is a low-risk, low-cost approach to expanding core competencies and for extending commercial reach.

The asset-light business model supports an attractive +20 per cent return on invested capital. It has generated an accretive 19.90 per cent annualize total return or a 6.14 times return on invested capital in Canadian Dollars since 2016.

Automatic Data Processing (ADP NASD)

ADP processes salary payments for 1 in 6 Americans and owns a global footprint of operations spanning 140 countries. It is a dividend aristocrat with a 51-year consecutive track record of raising its dividend. Additionally, since 2011 it has typically executed a one per cent annual buy back. The artificial intelligence hype that drove a deep sell-off of enterprise software and other software segments is an opportunity for new investors. While, a payroll processing platform could easily be built by AI, the nuances of city, county, state, federal, and international tax remittance demands will prove problematic to execute for startups.

Further, spousal, parental child garnishment payments and or bad debt garnishments, and other nuanced employee gross income recipients will prove to be problematic executions for startups. A core lesson from the Dot.com era was big corporations do not want nor typically benefit from large scale commercial relationships anchored on small, emerging technologies, and or startups. Long term owners have been well rewarded i.e., the annualized 10 and 15-year total returns in Canadian Dollars are 11.70 per cent and 16.17 per cent, respectively or ADP has generated a 3.02 times and 9.47 times return on capital invested, respectively over those periods.

CN Rail (CNR TSX)

Anxiety over U.S. tariffs largely proved erroneous as revenue grew, the divided was raised, and the company bought back $2 billion of shares in 2025. Investors that sold the company assuming U.S. tariffs would adversely impact it were wrong.

The integrated nature of North American logistics means tariffs were a minor headwind. The dividend currently yields 2.4 per cent and has been raised by three per cent for 2026. A new buyback authorization has been issued for the next 24 months and will provide downside support to the shares. CN Rail is a core holding and one we typically add on weakness.

PAST PICKS: MARCH 4, 2025

Canadian Apartment REIT (CAR-U TSX)

Then: $41.25

Now: $37.28

Return: -10%

Total Return: -6%

Franco-Nevada (FNV TSX)

Then: $206.79

Now: $373.70

Return: 81%

Total Return: 82%

Microsoft (MSFT NASD)

Then: US$388.61

Now: US$394.10

Return: 1%

Total Return: 2%

Total Return Average: 26%