Barlow’s Research Roundup: Six changes to Scotiabank strategist’s top 30 Canadian stock picks

Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow

Scotiabank top 30

Scotiabank strategist Jean-Michel Gauthier reports six changes to the quantitatively driven SQoRE Canada Top 30 list of top stock picks with important context,

“Daily Momentum factor returns remain unduly volatile. In the U.S., the 3M volatility remains ascendent, exceeding levels seen at the end of the Tech bubble although still below past all-time peaks post-1929 crash as well as the 2008/2009 crash and the 2020 post-COVID bounce. These volatility peaks tend to occur after severe outperformance/underperformance from a sector (Resources/Tech) or theme (quant junk, risk-on/risk-off), leaving that trade overstretched and at risk of reversal … Canadian banks reported another set of solid beats last week. Yet, market reaction was underwhelming. In our view, banks’ outperformance had reached extreme levels in late June, early July (see record high Momentum metrics, extended year-over-year leadership vs. the TSX) while also making record highs on valuation levels (Value metrics at their lowest since 2009). Thus, the round of beats and raise (EPS estimates) only helped stabilize banks’ small slide in August … SQoRE Canada Top 30 – September Update. Some Gold miners come back in (DPM, BTO) at the expense of CURA and EIF. A swap in Energy (BTE for PXT). Energy and Financials are the two largest sectors, followed by Gold miners and Industrials”.

The top 30 stocks are now CES Energy Solutions, Parex Resources, Tamarack Valley Energy, Cenovus Energy, Athabasca Oil, Peyto Exploration & Development, Enerflex, Methanex, DPM Metals, Centerra Gold, B2Gold, SSR Mining, Discovery Mining, Bombardier, Russel Metals, Mullen Group, Bird Construction, NFI Group, Linamar, Magna, Bausch Health Cos, TD Bank, Bank of Nova Scotia, BMO, CIBC, Manulife Financial, Power, Atco, and Primaris REIT.

Canada attractive

MSCI strategist Raman Aylur Subramanian is touting Canada as an ideal market for global portfolio diversification,

“The concentration inside many global portfolios today is real, and it has intensified. The U.S. has climbed from roughly half of global-equity-market capitalization in the early 2000s to close to two-thirds today, carrying information technology’s rise from about 21 per cent to about 30 per cent of global equity weight along with it. That same U.S.-technology exposure recurs in fixed income, where the U.S. share of global investmentgrade and high-yield bonds has risen to roughly 40 per cent from about 30 per cent in 2006. Canada emerges as a genuine, underutilized destination for reallocation. Its equity market is dominated by financials, energy and materials, giving it a distinct sector and factor profile. Over half the revenue of Canadian-domiciled firms is earned abroad, so the tilt need not sacrifice global earnings exposure. The country is also under-owned relative to its economic weight, most acutely in private markets, where it represents about 2.2 per cent of global private NAV against a 3.6 per cent share of developed-market GDP. Four sectors targeted for growth by the government sharpen the opportunity: An infrastructure program aligned with where global institutional capital is already moving. A critical-minerals endowment that pairs geological depth with rule-of-law stability. A defense-industry rebuild still measured in decades but anchored by mineral supply security. An energy system that combines major net fossil-fuel exports with one of the cleanest power grids among large producers”

Dark traffic in Strait of Hormuz

RBC Capital Markets commodity strategist Christopher Louney reports on the Strait of Hormuz traffic and rising U.S. LNG exports,

“The incremental move toward dark [position trackers off] transits has likely been supported by shuttle operations over this period. Transits will likely continue to push dark given the recent Iranian threats to violators. The risk to seafarers remains an important factor for the industry, as we have heard that there are fewer seafarers willing to work the route. According to the IMO, at least 19 seafarers have been killed since the start of the war … LNG exports rose 23 per cent in the first half of 2026 versus last year as new terminals and expansions boosted exports at the fastest rate since 2016. Golden Pass LNG continues an uneven ramp up that began this spring, and the final train for Corpus Christi Stage 3 reached substantial completion on August 28, bringing total US export capacity to roughly 20 bcf/d by the end of 2026. Over the next two years, roughly 7.5 bcf/d of additional export capacity is expected to come online, further supporting the structural growth story for U.S. export capacity that will underpin both U.S. gas and global LNG”

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Diversion

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