CIBC analyst reaffirms his top industrial stock picks after firm’s recent conference

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

CIBC analyst Kevin Chiang summarized the findings from the firm’s recent industrials conference,

“We had the opportunity to attend a presentation focusing on ATRL’s nuclear business presented by Jeff Bell, CFO and Joe St. Julian, President, Nuclear. Our key takeaways were: The nuclear industry is currently experiencing its strongest growth cycle in four decades, driven by the global push for reliable, low-carbon baseload energy … ATRL has a unique advantage in the nuclear sector as the steward of CANDU® nuclear technology … To meet the growing demand for nuclear services, ATRL has expanded its workforce by 2,200 to 5,000 employees in recent years … CAE – Q&A With Management. We had the opportunity to sit down with Nick Leontidis (COO) and Andrew Arnovitiz (SVP, Investor Relations and Enterprise Risk Management).

“In addition, we had the opportunity to try CAE’s VR goggles. Our key takeaways were: in terms of the underlying demand environment, CAE painted a positive backdrop. On the Civil side, CAE continues to see a secular tailwind for pilot training demand … The outlook for business aviation remains healthy and CAE has the second-largest market share in business aviation pilot training … On the defence side, CAE discussed Canada’s commitment to its 2-per-cent military expenditure target for the 2025-2026 fiscal year ending March, with expectations that it may exceed the target in future years. We highlight that this is significantly ahead of previously announced timelines just 12 months ago.

“We had the opportunity to tour CN’s Taschereau Yard. Our key takeaways were: The yard is essentially a one-stop shop. Given the yard’s footprint, CN has the capacity to grow here as well … STN – Tour Of Vaudreuil-Soulanges Hospital Project. We had the opportunity to tour the Vaudreuil-Soulanges Hospital project with Alex Di Domenico, Regional Growth Leader, Buildings … Our key takeaways were: … Construction on the Vaudreuil-Soulanges hospital began in 2022 with hand-off anticipated to occur in 2027 … The hospital will hold 404 beds, an emergency department with capacity for 41 stretchers, and 11 operating rooms. It is expected that the hospital will employ ~3,500 employees, with 250 of those being physicians … WCN – Lachenaie Landfill Tour. We had the opportunity to tour WCN’s Lachenaie Landfill. Our key takeaways were: Lachenaie services the Montreal area with over 800 employees, six hauling operations, five transit stations, four MRFs, and two C&D sorting centres. It brings in waste from Montreal, Sherbrooke, Grandy, and Gatineau. The site processes 1.2MMt/year of solid waste and 75kt year of green/organic waste. It processes 100 per cent of its leachate on site. WCN noted that Lachenaie is the ‘landfill of the future’ given its RNG facility with extensive gas capture systems, its leachate processing capabilities, its stratification and acceptance of multiple waste streams”

Mr. Chiang has “outperformer” ratings on TFI International Inc., Mullen Group Ltd., Canadian Pacific Kansas City, Air Canada, Chorus Aviation Inc., Bombardier Inc., GFL Environmental Inc., Waste Connections Inc. and Cargojet Inc.

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BMO senior economist Erik Johnson detailed the sharp drop in domestic zero emission vehicle sales,

“The pause of federal (and some provincial) rebates in mid-January has shifted zero emission vehicle sales (ZEV) in Canada into reverse. ZEV sales as a share of total registrations fell to 8.7 per cent in Q1 compared to 13.9 per cent in 2024Q4. That sharp turnaround is perhaps best captured by the huge shifts in Quebec, where the share of ZEV sales went from 40.0 per cent in 2024Q4 down to 13.2 per cent in Q1. Monthly sales in April showed some recovery after Quebec reinstated its rebate program, but it is shaping up to be a year of sideway sales (at best) for the ZEV market in Canada. Meantime, hybrid electric vehicle (HEV) sales have continued to perform well, reaching 12.6 per cent of vehicle sales in Q1 from 10.6 per cent in 2024Q4. Bottom Line: It turns out that raising the effective price of something lowers demand for it. Auto tariffs threaten to further disrupt the ZEV market this year, but it’s likely that HEV sales will continue to strengthen”

“BMO: “It turns out that raising the effective price of something lowers demand for it” – (research excerpt, chart) Bluesky

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AI applications are already providing big benefits in the software industry according to BofA Securities analyst Koji Ikeda,

“The DevSecOps (Application Development, Security, IT Operations) industry is one where generative AI is proving it can work. More specifically, organizations are seeing 25-50 per cent in productivity gains when using AI code generation tools. With more AI-powered developer tools being created, we believe 500+ million new applications will be built over the coming years … In our recently published: CIO survey report (500 IT decision makers, published 6/3), we found that 32 per cent of software budgets in 2026 will be allocated to AI, up from 28 per cent for 2025 … We also conducted a DevSecOps specific survey for this report, where we found that AI is going to be used throughout 44 per cent of developer workflows over the next twelve months (on a weighted basis). Moreover, respondents believe AI developer tools could drive 35 per cent in cost savings (on a weighted basis) … Atlassian is a software vendor that sells collaboration tools focused for developer teams, as well as many other developer tools … Its AI strategy is built around Rovo – which is included for all of its paid Jira, Confluence, and Jira Service Management subscribers … GitLab was founded in 2011 and became a public company in 2021 … While GitLab is most known for its leading git source code repository, over the years, it has built an end-to-end developer workflow automation platform … Its AI products are called Duo, which include features such as code generation, chat, suggested reviewers, and testing … JFrog was founded in 2008, and became a public company in 2020. It is most well-known for its Artifactory product, which is a binary repository manager. A binary is what source code (i.e., what software developers type) gets transformed into so a machine can read it”

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Bluesky post of the day:

Diversion: “This Simple Strength Test Could Reveal if You’re at Risk for Alzheimer’s and Heart Disease” – SciTechDaily