Darren Sissons, Partner & Portfolio Manager, Campbell, Lee & Ross Investment Management
Focus: Global & technology stocks
Top Picks: Accenture PLC, Alphabet, S&P Global
MARKET OUTLOOK:
Markets reacted violently to the Iranian conflict in the first quarter of 2026, flipping funds out of non-artificial intelligence (AI) growth into energy to chase conflict gains.
That transition triggered two challenges. First, taxation triggered gains on divested growth investments is due in March 2027 with further tax due on energy sector trims or exits also in March 2027. Second, the risk of a sudden reversal on energy gains when peace breaks out is high and is especially pronounced for investors late to the conflict trade.
For clients, we trimmed energy winners during the first quarter, raised dry powder, and deployed capital into sectors adversely impacted by the conflict trade. The logic is simply: you make money when you buy so deploying dry powder into high quality names temporarily impacted by the conflict is a winning strategy.
The geopolitical nature of current energy gains is also concerning given the second Trump administration approval rating has fallen below 30 per cent. Midterm elections in November raise the specter of a “lame duck” presidency in his final two-year term i.e., voters typically reflect negative economic views (high energy prices and rising unemployment) and their dissatisfaction at the ballot box.
Consequently, the U.S. president is likely to implement growth catalysts and perhaps end the Iranian conflict early in order to avoid “lame duck” status.
We suggest against increasing oil exposure now. Health care and medical technology are trading at attractive entry levels.
Software and the data-driven industrial companies, which have been adversely impacted by the AI-hype thematic, are also attractively priced.
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TOP PICKS:
Accenture PLC (ACN NYSE)
A progressive dividend yielding 3.70 per cent.
It is the premiere information technology (IT) outsourcing firm active across communications, media and technology; financial services; health and public service; products; and resources.
The company benefited from a multi-decade outsourcing trend whereas Fortune 2000 companies and governments, its primary addressable market, outsourced non-core but critical IT projects. The recurring, multiyear and expanding nature of these projects implies deep embedded relationships with its clients.
Like many software vendors currently, it is on sale due to the perceived but unlikely development that AI will replace large swathes of its workflow.
The Dot.com era taught board of directors and management teams the commercial folly of relying on relatively nascent companies to deploy point solutions.
Equally so, chief information officers of large corporations typically require a roster of mature technology projects deployed by equivalent peers prior to implementing a new commercial relationship impacting company-wide end client and employee facing functionality.
The company’s shareholder return algorithm includes an annual dividend increase and a share buyback. At current depressed share price levels, the buyback is incrementally beneficial vis-à-vis prior years.
Revenue and earnings per share grew at a 10-year, annual average rate of 7.70 per cent and 7.10 per cent, respectively.
Alphabet (GOOGL NASDAQ)
Alphabet introduced a dividend in June 2024, which has progressively risen to 0.23 per cent with further upside expected.
It is a natural beneficiary of AI spend given the scale of its storage network and the interrelated nature of its portfolio. Google Cloud grew 63 per cent year over year as government and enterprise demand remained at high levels.
Digital advertising continues to provide upside and benefits from AI functionality, so it grew 13 per cent increase over last year.
YouTube and the AI properties continue to draw eyeballs and growth. Management are supporting enterprise wide growth via a capital expenditure budget of size.
Revenue and earnings per share grew at an annual average rate for 10 years of 16.75 per cent and 23.40 per cent, respectively.
Also, Alphabet generated a five-year, annualized, total return of 30.30 per cent in Canadian dollars.
S&P Global (SPGI NYSE)
Its dividend yields one per cent and the company is a dividend aristocrat with a 50-year track record of progressive dividend increases.
Post the spin-off of the mobility division scheduled for mid-2026, its core business includes S&P Global Market Intelligence, which provides multi-asset-class data, software, and research via the Capital IQ platform; S&P Dow Jones Indices, which provides S&P 500 and the Dow Jones Industrial Average and related data analytics; and S&P Global Commodity Insights, which provides pricing and benchmarks for a range of commodities.
The company is a direct beneficiary of the growth of exchange-traded funds (ETFs) and passive investment flows. It also benefits from monetary and fiscal policy stimulus as those capital flows are ultimately captured by indexes and or by licenses or revenue streams paid by ETF companies.
The company operates an asset light business model so requires modest capital expenditure to grow.
Revenue and earnings per share (EPS) have grown at a per annum rate since 2016 of 12.50 per cent and seven per cent, respectively.
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| ACN NYSE | Y | Y | Y |
| GOOGL NASDAQ | Y | Y | Y |
| SPGI NYSE | Y | Y | Y |
PAST PICKS: MAY 16, 2025
AstraZeneca (AZN NASD)
Then: US$1033.00
Now: US$13,374.00
Return: 29%
Total Return: 31%
Canadian Pacific Kansas City (CP TSX)
Then: $114.00
Now: $116.19
Return: 2%
Total Return: 3%
Linde Plc (LIN NASD)
Then: US$457.77
Now: US$494.52
Return: 8%
Total Return: 9%
Total Return Average: 17%
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| AZN NASDAQ | Y | Y | Y |
| CP TSX | Y | Y | Y |
| LIN NASDAQ | Y | Y | Y |
