The floor at the New York Stock Exchange on May 7.Richard Drew/The Associated Press
Good to be back in your inbox, Trade Off friends.
Jon Erlichman here 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
The stocks showing up lately in the Trade Off competition’s top portfolios tell a familiar story. Exposure to the AI boom has been the common thread tying our leaders together. Contest participants who are out front are loaded with the usual suspects: Western Digital, Micron, AMD (which had a strong week on the back of solid results) and Alphabet, which has been jockeying with Nvidia for the title of world’s most valuable company.
The Trade Off player who posted the biggest weekly gain this week, “Lunatic,” and climbed to No. 18 on the leaderboard, has both AMD and Micron’s stocks in their portfolio.
Bottom line? The AI trade has legs. You’re seeing it in the earnings, you’re seeing it in the capex – the capital expenditure that companies are using to improve operations – and plenty of you are seeing it in your own returns.
Boring, but beautiful?
While the AI names continue to grab the spotlight, one of the more interesting shifts I’ve noticed lately is a renewed appetite for the kind of stocks that don’t usually trend on social media.
Warren Buffett recently flagged what he sees as a casino-like mentality in today’s market, and said he’s content to sit on a mountain of cash until investors get a little more fearful. That’s classic Buffett. But what’s interesting is that even as the AI trade has powered higher, value stocks just had their best quarter in years.
Bloomberg recently put together an analysis of stocks that screen well on a combination of four metrics: reasonable valuations, decent momentum, low volatility and solid profitability. Call them boring, but beautiful. American names that scored best on the screen include Travelers, Devon Energy, Motorola Solutions, CF Industries, Lockheed Martin, Verizon, Merck, VICI Properties, Edison International, TJX and PepsiCo.
For Trade Off players, the takeaway isn’t that you should swap your AI winners for utility stocks. It’s that diversification matters, and during stretches when the high-fliers cool off, names like these tend to do the heavy lifting in a portfolio. Something to keep in mind as you think about the back half of the contest.
Quiet winners hiding in plain sight
Another area worth watching: spinoffs. A spinoff is what happens when a large company decides to separate one of its divisions into its own publicly-traded company. Investors in the parent company typically receive shares in the new business, and that smaller piece often goes on to outperform on its own. A few recent examples have also gotten an extra boost from the AI theme.
Sandisk, which was separated from Western Digital earlier this year, has been one of the standout stories. GE Vernova, spun out of GE in 2024, has more than doubled. Solstice Advanced Materials (carved out of Honeywell) and Qnity (carved out of DuPont) have also delivered nicely for early shareholders.
The pace of new spinoffs has slowed in 2026, but the theme is shifting toward what some on Wall Street and Bay Street are calling “physical AI.” Think robotics, autonomy and logistics. Honeywell’s plan for a three-way breakup later this year is one to keep on your radar, particularly its automation arm.
Trade Secret tips
Volatility has been a recurring theme this season, and one way to navigate it is to look at stocks the broader market has overlooked. This piece highlights three neglected names worth a closer look.
It’s easy to call a stock “cheap.” It’s harder to find ones that are cheap and attractive on growth and dividends. The Number Cruncher has a smart screen for that combination.
And for those of you wanting to keep things closer to home, here’s a list of Canadian companies with standout growth prospects trading at reasonable valuations. A nice complement to this week’s theme.
That’s all from me this week. Good luck with your picks.
Talk to you next Tuesday,
Jon
Jon Erlichman is the founder of Ticker Take on YouTube and a contributor to BNN Bloomberg.