Here we are, Trade Off friends.
I’m Jon Erlichman with another edition of Trade Secrets, our weekly newsletter for The Globe and Mail’s stock picking contest, Trade Off.
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The Leaderboard
Hard to believe we’re already into the final days of the contest. Whatever your portfolio looks like right now, let’s hope the past few months have given you a better feel for the markets and a few names you’ll want to keep tracking long after the competition ends.
A quick look back at what’s worked since gameplay began in late March helps explain a lot of what we’ve seen on the leaderboard. In the U.S., the chip story has been the dominant theme. Semiconductors have easily been the top-performing corner of the market, with names like Sandisk, AMD and Micron continuing to climb. The AI build-out has fed almost every part of the chip supply chain – processors, memory, packaging, networking, even cooling. If you had exposure to that group, the contest has likely been kind, and even after last Friday’s rout the sector is rebounding.
In Canada, tech has also led the way on the Toronto Stock Exchange, with the sector well ahead of other sectors that have advanced, including financials, energy and utilities. Among individual names, the standouts include BlackBerry, Celestica and MDA Space.
The Week in Markets
June doesn’t have the best reputation on Wall Street. Since 1950, it’s the only month that has never been the S&P 500’s high point for the year. It also tends to run weaker in midterm election years, and 2026 happens to be one of those.
That said, June has been higher in nine of the past 10 years, with an average gain of close to 2 per cent. And the landscape heading into this June is unusual. The S&P 500 jumped about 16 per cent across April and May, a back-to-back run we’ve only seen four other times since 1950. In every one of those cases, the index was higher six months later, often by close to 17 per cent. Throw in the fact that this bull market is now the eighth longest since the Second World War, and the runs that made it this far tended to keep going for years. Plenty for the bulls to chew on as we head into summer.
Small caps most investors are missing: A lot of the conversation this season has focused on the same handful of big tech names. With the contest winding down though, it’s worth highlighting that big is not always better.
On the latest episode of my investing show, Ticker Take, I sat down with Jordan Zinberg, president and CEO of Bedford Park Capital. Zinberg has built his career hunting for smaller, lesser-known companies. He started out in large-cap stocks like most investors, but quickly realized the smaller names were often more interesting. Faster growth, lower multiples, and a lot less competition from other big-money buyers. As he put it, nobody is going to hire him to buy shares of Royal Bank of Canada.
Zinberg looks for sustainable growth, a reasonable multiple given that growth, a management team with real skin in the game, and strong share price momentum. He also sorts his picks into three buckets. Established compounders have long track records. Emerging compounders show the same growth profile but with a shorter history. The third bucket is everything else, including spin-offs, clean-up trades and other unique situations. Interestingly, one of the six names he mentioned in our conversation was a standout performer during the competition – Bird Construction (BDT). Other names he highlighted: Propel Holdings (PRL), TerraVest Industries (TVK), Zedcor (ZDC), Source Energy Services (SHLE) and Atlas Salt (SALT). You can hear his full reasoning on each company on Ticker Take.
None of this is financial advice. But for Trade Off players, it highlights the fact that opportunities don’t always live in the most familiar places.
Trade Secret Tips
A few reads from The Globe and Mail worth your time this week.
For those of you starting to look ahead, CIBC’s chief market technician Sid Mokhtari laid out his top 10 stock picks for June. A timely list from one of the more closely watched technical voices on Bay Street.
If you’re looking for income ideas, this Number Cruncher piece highlights five companies tied to the battery and energy storage story that also pay sustainable dividends.
And a useful read for anyone thinking longer-term. Carrying debt into retirement is more common than people realize, and this piece breaks down the warning signs every financial plan should account for.
Thanks for being part of Trade Off this season. Whether you’re chasing the leaderboard in the final days or already thinking about your next set of picks, I hope the past few months have been useful.
Good luck with the home stretch.
Jon
Jon Erlichman is the founder of Ticker Take on YouTube and a contributor to BNN Bloomberg.