Martin Cobb’s Top Picks for March 24, 2026

Martin Cobb, Senior Vice-President, Equities, Lorne Steinberg Wealth Management

Focus: Global & North American Equities

Top Picks: Microsoft, Canadian Apartment Properties REIT, Experian

MARKET OUTLOOK:

One of the first “white papers” I ever did as a young analyst was to try and decipher the impact of oil prices on inflation. While undoubtedly inflationary in the short term, as they feed through into largely nondiscretionary spend, sustained higher oil prices begin to exert deflationary forces in time. Central bankers will have to wrestle with this dynamic over the coming months. Expectations for rates have nonetheless risen. That usually provides a headwind to stock markets.

A year ago, there was a lot of chatter about the end of American “exceptionalism” and indeed, over the past year or so, we had seen international stocks outperform their U.S. counterparts. The past month has yet again revealed the significant endowment benefits this part of the world enjoys, in terms of being reasonably self-sufficient in energy and relatively insulated therefore from prices spikes compared to much of Europe and Asia.

Not surprisingly, we are getting a number of questions on the war and what we, as investors, should do about it? A student of history will tell you that, for anyone with a time horizon beyond a few weeks or months, such sell-offs have typically proven good buying opportunities. Indeed, John Templeton made his name and his fortune by, at the outset of Second World War, borrowing a considerable amount of money and telling his broker to buy US$100 of every stock on the New York and American stock exchanges that traded for less than US$1 per share.

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TOP PICKS:

Microsoft (MSFT NASD)

• In some ways needs little introduction, but Microsoft has changed considerably over the past several years, having gone from more a vendor of products to a purveyor of services
• That has resulted not only in a higher quality revenue steam but also reignited growth
• About a half of profits from productivity and business processes, one third from intelligent cloud and close to 10 per cent the consumer biz (PCs, devices, gaming, search)
• Dominant market positions (effectively owning the PC software market and a strong second or third elsewhere), they would appear to have a long runway of growth potential ahead
• Anticipated to continue to deliver revenues growth well into double-digit territory for a few years yet, albeit with probably less room nowadays for meaningful margin upside
• A free cashflow behemoth (despite the hefty capex) and thus the potential for still significant share buybacks driving the compound annual growth rate into the mid to upper teens
• Commanding a balance sheet position of modestly net cash, triple A rated by both S&P and Moody’s (only them and Johnson & Johnson enjoy that nowadays)
• Was a $4 trillion dollar market cap stock not so long ago: today its market cap starts with a two (i.e. the stock has not been a great performer over the past couple of years)
• Trading on close to 20 times next 12 months’ earnings, what’s not to like?

Canadian Apartment Properties REIT (CAR.UN TSX)

• The Canadian condo market is witnessing some of the worst conditions seen since the early 1990s
• So why would one want to own the country’s largest residential landlord, with close to 50,000 apartments across the country?
• Well because the Canadian condo market is witnessing some of the worst condition seen since the early 1990s!
• And, as a result, the stock has retraced markedly and now looks compellingly valued for anyone with a time horizon of beyond the next year or two
• Condo starts have collapsed and, so, in three to five years’ time the market will be in a very different shape
• Moreover, CAPREIT (whose portfolio tends to be away from the downtown cores) recently revealed that, while some 27 per cent of their units are likely paying above average rents of around eight per cent on average, the other 73 per cent is paying submarket rents of about 20 per cent below market
• The stability of their occupancy rates (around 98 per cent), their rent collections (around 99 per cent) and their gross margins (around 65 per cent) combine with the ability to continue to invest in, grow and reposition their portfolio over time
• We used to see continued units issuance to fund additional growth but, in recent years, they have been a fairly aggressive buyer of their own stock
• Valued at a 25 to 30 per cent discount to book / net asset value versus closer to par historically

Experian (EXPN LON)

• Known colloquially as a credit bureau, Experian from Dublin, Ireland, is the leading global data and technology company specializing in consumer credit reporting
• They collect and aggregate information on over one billion people and several hundred million businesses (though the U.S. remains two thirds of sales)
• A predominantly business to business offering that spans various markets, including financial services, healthcare, automotive, and insurance
• Barriers to entry in this industry are high due to the extensive data assets, regulatory requirements, privacy protection, and the need for sophisticated analytical capabilities
• And will the world ever need less background checks on individuals and particularly so when it has to do with their finances?
• The company is known for its industry-leading innovation which today means they are developing new tools with generative artificial intelligence embedded within them
• With minimal capex and working capital required, they have grown revenues at an eight per cent annual clip over the past five years (mostly organic) and with incremental margin improvements on top
• More of the same can be expected, i.e. annual eps growth of around 10 per cent
• For which we are paying 18 to 19 times next twelve months earnings, both a sizeable discount to their historical average of more like 27 times and below the 21 times multiple of Equifax, the industry second

PAST PICKS: MAY 27, 2025

Techtronic Industries (669 HK)

Then: HK$88.85

Now: HK$105.60

Return: 19%

Total Return: 20%

Alphabet (GOOGL NASD)

Then: US$172.90

Now: US$297.35

Return: 72%

Total Return: 72%

Canadian Natural Resources (CNQ TSX)

Then: $43.05

Now: $67.57

Return: 57%

Total Return: 63%

Total Return Average: 52%