TD Cowen has released a list of high-conviction Canadian stock picks compiled by its analysts, paired with macroeconomic commentary from TD strategists Robert Both and Jayati Bharadwaj on forces they say are underappreciated by markets.
Rate Divergence and Tariff Resilience
According to the TD strategists, one of the key macro influences right now is the widening gap between Bank of Canada and Federal Reserve policy paths. TD’s analysis argues that rising oil and gas prices have not pushed up core inflation in Canada the way they have in the United States, where energy costs are contributing to stronger inflation pressure. With the Bank of Canada on hold and the Fed expected to raise rates further, TD strategists say Canadian bond yields will likely stay well below U.S. levels, a trend that could weigh on the Canadian dollar as capital seeks higher yields elsewhere and reflects slower domestic growth.
The strategists also said Canada’s economic resilience in the face of U.S. tariff increases is being underestimated. They pointed to domestic manufacturing output sitting only one per cent below pre-tariff levels, and employment down just 1.4 percentage points from the end of 2024, a trend they said points toward a near-complete recovery. Federal fiscal spending has also helped soften the impact of tariffs, per the strategists.
Canadian Economic Indicators Since Tariff Hikes
Mr. Both and Ms. Bharadwaj said they are watching for more clarity on background issues such as immigration and household debt, which have been overshadowed by the tariff dispute. Canada has recorded three consecutive quarters of population decline, and the strategists said the future path of population growth—and its effect on GDP—remains hard to forecast. They also expect elevated household debt to draw renewed attention, noting that mortgage rates have risen as Canadian borrowing costs track U.S. yields, though not to the same degree. Higher mortgage costs are expected to weigh on growth as more borrowers face renewal.
Sector-by-Sector Top Picks
Within capital goods, TD Cowen’s selections are Adentra Inc. (ADEN-T), Atkinsrealis Group Inc. (ATRL-T), Cargojet Inc. (CJT-T) and CCL Industries Inc. (CCL-B-T). Among consumer stocks, the picks are Dollarama Inc. (DOL-T), High Tide Inc. (HITI-X), North West Company Inc. (NWC-T) and Premium Brands Holding Corp. (PBH-T).
In energy, power and utilities, TD Cowen favours Capital Power Inc. (CPX-T), Keyera Corp. (KEY-T), Suncor Energy Inc. (SU-T) and Whitecap Resources Inc. (WCP-T). Its financial services picks are Brookfield Corp. (BN-T), Onex Corp. (ONEX-T) and Trisura Group Ltd. (TSU-T), while Well Health Technologies Corp. (WELL-T) is the lone health-care selection.
In materials, the list includes Barrick Mining (B-N), Equinox Gold Corp. (EQX-T), Hudbay Minerals Inc. (HBM-T) and Royal Gold Inc. (RGLD-Q). The real estate picks are Chartwell Retirement Residences (CSH-UN-T) and Riocan REIT (REI-UN-T), and in technology, TD Cowen named Celestica Inc. (CLS-T) and Thomson Reuters Corp. (TRI-T).
AI’s Potential in Health Care
Separately, Citi analyst Joanne Wuensch outlined her view that artificial intelligence will reshape health care by speeding up drug development, improving robotics and surgical outcomes, and streamlining data management. Ms. Wuensch said AI’s initial impact will come through cost savings and better organization in drug development, with the technology expected to become central to research and development over the medium term, potentially driving a wave of successful treatments.
In a table of potential AI beneficiaries by health-care subsector, Ms. Wuensch listed Bristol Myers Squibb (BMY-N), Eli Lilly and Co. (LLY-N) and Pfizer Inc. (PFE-N) among U.S. pharmaceutical and biotech companies best positioned to benefit. In medical technology, she cited GE Healthcare Technologies (GEHC-Q), Intuitive Surgical Inc. (ISRG-Q), Medtronic PLC (MDT-N) and Stryker Corp. (SYK-N). For life science tools and diagnostics—an area she said is already seeing AI-driven profit margin improvements—she named Guardant Health Inc. (GH-Q), 10X Genomics Inc. (TXG-Q), Bruker Corp. (BRKR-Q) and Thermo Fisher Scientific (TMO-N) as potential winners.
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