Chris White’s Top Picks for April 13, 2026

Chris White, Head of Research, 5i Research

Focus: Canadian equities

Top Picks: Shopify, Constellation Software, TMX Group

MARKET OUTLOOK:

What I find interesting is the stair-step pattern that’s emerging. Bad headline, oil spikes, markets drop - but each time we get a positive development, the recovery is a little more resilient, and the next selloff is a little shallower. That’s the market climbing the wall of worry. The same bad news stops moving prices as much, because it is largely already priced in.

Oil declined 10 to 15 per cent on the ceasefire news, and even if the Strait of Hormuz opens and closes a few more times, I think the market has already started pricing in an eventual resolution. That’s the key point - markets don’t need an all-clear. They tend to move on the rate of change. We saw this after Liberation Day in April 2025. The markets bottomed on the tariff delay, not the actual U.S.-China deal. The signal was de-escalation, not resolution. I think we’re seeing the same dynamic here.

The Cboe Volatility Index (VIX) spiked above 30 two weeks ago. Historically, that’s not a warning sign, it’s a long-term buying signal. The problem is it never feels that way in the moment, and that discomfort is exactly the point. Good investing rarely feels comfortable.

So how does an investor position here? Three buckets. If the VIX rises above 30 – I’d be comfortable adding to growth, that level implies near-capitulation and growth typically leads the rebound. Between 20 and 30 – I’d be leaning defensive: energy, staples, HALO names. Below 20 - tilt back toward a growth and value mix.

“Comfort is the enemy of returns”

One of the most counterintuitive things in investing is that the stocks with the best historical returns often look nothing like what investors actually want to buy. Most investors want a good yield

, a cheap valuation, and low volatility - something that feels safe. And those characteristics do produce returns. Just OK ones.

When I looked at the actual data across every TSX and S&P 500 stock over a ten-year period, the stocks that actually multiplied wealth were expensive, volatile, paid little to no dividend. So nothing like the “safe choice” that most investors want to own. I overlaid a Canadian compounder against a classic “safe choice” - the safe stock had a 17 times forward multiple, low volatility, a six per cent yield. The compounder was at 51 times forward earnings, had high volatility, and paid nothing. In year one the safe stock feels better – an investor is collecting that yield, there’s not much noise. But by year ten the compounder had multiplied wealth eight times faster.

The reason is pretty straightforward once you see it. The expensive multiple reflects the market pricing in a long growth runway. The low dividend means cash is being reinvested back into the business rather than paid out. The volatility is just a reflection of operating in a high-growth industry - it’s opportunity, not instability. These traits feel uncomfortable, but they’re actually what compounding looks like before it’s finished.

I think a lot of investors treat volatility as risk, but in reality, volatility is often the engine of compounding returns. The highest long-run returns are almost always found in stocks that also see large drawdowns along the way. That’s the price of admission. And following the herd feels safe, it’s ingrained in us as humans, but most wealth is created by going against the herd.

The psychological trap is that immediate income feels real and future compounding feels abstract. Mark Yusko said it best: “Comfort is the enemy of returns.” The historical data backs it up pretty nicely.

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TOP PICKS:

TMX Group (X TSX)

TMX Group is Canada’s financial markets infrastructure backbone - operator of the TSX and TSX Venture - and while it lacks an exciting story at first glance, it has compounded quietly and consistently. The exchanges themselves are essentially a regulated toll road: when markets are active, transaction volumes drive revenue; when volatility spikes, derivatives volumes follow, and TMX benefits on both sides. But the more compelling part of the story today is the data and analytics business.

In 2024, TMX acquired VettaFi, now the fastest-growing segment, which creates custom indexes that thematic and niche ETFs benchmark against. As those ETFs grow their assets, TMX collects an index licensing fee on every dollar of growth; VettaFi’s AUM grew 49 per cent to $77 billion in 2025, and that compounding fee stream is something most investors have yet to fully price in. Full-year revenue grew 18 per cent and operating income rose more than 20 per cent, reflecting the operating leverage embedded in the business. With the stock having pulled back from its highs, I see a reasonable entry point into a high-quality business with a data analytics engine that is growing at a strong pace.

Constellation Software (CSU TSX)

Constellation Software has been one of Canada’s greatest capital allocators, building a portfolio of over 1,000 niche vertical software businesses - transit scheduling systems, dental practice tools, golf club management software - where switching costs keep customers locked in for years. The business has compounded at an extraordinary rate for two decades, but the stock has been roughly cut in half on AI disruption fears. The concern is legitimate at the margin: a simple scheduling app can increasingly be built by one person with AI.

Constellation has spent years resolving every edge case, think twilight rates, caddie booking, cancellation logic, member guest pricing, and any competitor would need years to replicate that institutional depth. Meanwhile, the company has launched permanent engaged minority shareholder (PEMS), a strategy where instead of acquiring smaller companies outright, they take meaningful stakes in larger, more complex ones. This is the natural next step for a business generating more cash than small acquisitions can absorb, and it directly addresses the AI concern: the larger and more complex the enterprise software, the less feasible it becomes to simply rebuild it overnight. Founder Mark Leonard has stepped back from his President role due to health reasons, but he built a deliberately decentralized organization. Full-year revenue grew 18 per cent and free cash flow rose 14 per cent. At roughly 15 times forward earnings, its cheapest valuation in 13 years, I think this represents a compelling long-term entry point for investors who always wanted Constellation exposure but found it too expensive.

Shopify (SHOP TSX)

I believe Shopify is Canada’s most important tech company, comparable at times to Royal Bank in market cap, and in my view, it is winning the global commerce infrastructure war. The company provides an end-to-end operating system for merchants, from storefront and payments to fulfillment and capital, serving businesses ranging from solo entrepreneurs to enterprise brands like GM, L’Oréal, and Starbucks.

It is a platform with two-sided network effects: merchants stay because the ecosystem keeps expanding, and developers build on Shopify because the merchants are there. The result is a commerce infrastructure layer that is extremely difficult to displace.

On the valuation piece, there is a saying that: “I don’t need an analyst to tell me when a 10 times earnings stock is cheap - I need an analyst to tell me when a 60 times earnings stock is cheap.” Shopify is one of those cases. The valuation has stayed elevated because the long-term tailwinds are genuine. CEO Tobi Lütke has repositioned the company as AI-first, requiring managers to exhaust AI solutions before adding headcount, keeping the cost structure lean while margins expand. On the revenue side, Shopify is actively building for agentic commerce: if AI agents begin executing purchases on behalf of consumers, Shopify intends to be the infrastructure those transactions run through. The stock declined as much as 40 per cent peak-to-trough over recent months. For investors seeking exposure to AI and a large Canadian tech compounder, I think the pullback represents a meaningful long-term opportunity.