Joe Farrell, a top-ranked quantitative technical analyst at Ventum Financial, believes the S&P/TSX Composite Index can hit 50,000 within the next three to five years.
In a report published last month, he said the S&P/TSX Composite Index, “has broken out of the multi-decade ascending parallel channel. The breakout above 25,000 counts further technical upside in excess of 50,000.”
He thinks that this is “Canada’s time to shine.”
Mr. Farrell runs four model portfolios, including a Canadian large-cap model portfolio that has outperformed the broader market.
Last month, his Canadian large-cap model portfolio rallied 3.5 per cent, above the 0.7 per cent price return for the S&P/TSX Composite Index. In 2025, his Canadian large-cap model portfolio delivered a 32.7-per-cent price return compared to a 28.3-per-cent gain for the broader index. Since inception in Oct. 2019, the model portfolio has rallied 123.2 per cent, topping the 102-per-cent return for the TSX Composite Index.
His Canadian large-cap model portfolio, which he rebalances quarterly, contains 40 stocks. In mid-January, he released his latest holdings along with the stock weightings. They include:
- Royal Bank of Canada (RY-T) and Suncor (SU-T) each have a 6.25-per-cent weighting.
- TD Bank (TD-T) has a 5-per-cent weight.
- Bank of Montreal (BMO-T), Brookfield (BN-T), Cenovus Energy (CVE-T), CIBC (CM-T), Imperial Oil (IMO-T), Manulife Financial (MFC-T), Scotiabank (BNS-T) and Shopify (SHOP-T) each have weightings of 3.75 per cent.
- Agnico Eagle Mines (AEM-T), Barrick Mining (ABX-T), Bombardier (BBD-B-T), Cameco (CCO-T), Celestica (CLS-T), First Quantum Minerals (FM-T), Ivanhoe Mines (IVN-T), Lundin Mining (LUN-T), Nutrien (NTR-T), RB Global (RBA-T), TC Energy (TRP-T), Wheaton Precious Metals (WPM-T) and WSP Global (WSP-T) each with weightings of 2.5 per cent.
- Alamos Gold (AGI-T), Alimentation Couche-Tard (ATD-T), BCE (BCE-T), CAE (CAE-T), Canadian Utilities (CU-T), CCL Industries (CCL-B-T), First Majestic Silver (AG-T), Franco-Nevada (FNV-T), Gildan (GIL-T), Kinross Gold (K-T), Magna International (MG-T), Pan American Silver (PAAS-T), Power Corporation of Canada (POW-T), Saputo (SAP-T), TFI International (TFII-T) and Toromont (TIH-T) each with weightings of 1.25 per cent in the portfolio.
Below are highlights from our conversation where he discussed potential investment opportunities based on his analysis.
In 2025, your Canadian large-cap model portfolio outperformed the S&P/TSX Composite index by 4.5 percentage points. Can you briefly explain your stock selection process?
It is based on technicals and relative strength.
Whenever I look at an absolute chart of any stock, basically there are three patterns. A stock can be in a defined uptrend, where it’s making higher highs and higher lows. It can be in an uptrend and be taking a breather, which we call a consolidation, and maybe it looks like it’s getting ready to breakout and reassert itself. And another way I like to buy stocks is when they’re reversing downtrends, so they’ve been in a pattern of lower highs and lower lows, and they break that downtrend.
I also look at stocks relative to the index. So, if I like Royal Bank, then I would then look at Royal Bank relative to the TSX. I’ll look at the ratio chart of the two because I want to buy, not just stocks with good absolute patterns, but ones that are also outperforming the market.
I’m a big believer in multiple time frames so I look at a stock’s 10-, 20-, 30-year monthly chart, three-to-five-year weekly chart, and a three-to-nine-month daily chart. I spend a lot of time looking at the bigger picture using weekly and monthly charts.
Every quarter, I build a portfolio that I think is going to beat the index.
In your Canadian large-cap portfolio, three stocks with the largest weightings are Suncor along with two bank stocks, Royal Bank and TD. All three holdings have absolute weightings of 5 per cent or higher.
The interesting thing about Suncor is that this stock in the last couple of months has just broken out of a structural 20-year base at $55. It topped back in 2008 at $73. So, it’s resolved the multidecade basing formation to the upside. It’s now approaching that last secular high for 2008 at $73 again. We think that over the next three to five years, Suncor can head north of $150.
When you look at the top 10 weightings, all of the big five banks are there, and that’s a function of the fact that they’re in the top 10 weightings in the index but we also like them. Technically, banks are exhibiting good relative strength.
Royal Bank has been in a bullish ascending parallel channel. Since the 2008-2009 crash, it’s been in a steady, very bullish ascending channel. It broke out of that channel in the middle of 2025. That channel is now rising through $200. The vertical height projection of that breakout, we think is going to take the share price of Royal Bank north of $300 over three years.
TD up until the middle of last year, it had been a massive laggard because of all the legal trouble they had. TD is now playing massive relative strength catch up. It just broke out in the back half of last year. It broke out of a 3½-year base. We think that the stock is heading north of $170 in three years.
Canadian telecoms eye paying down debt amid sluggish market
Structurally, where we are right now kind of rhymes with the early 2000s when the tech bubble was happening.
Tech has had a massive move in the last 17 years, especially in the U.S. and there’s a rotation out of tech.
I believe that we’re very much positioned like in the early 2000s. I think we’re still in the early stages of a structural bull market for commodities, a structural bull market for non-U.S. developed markets, obviously Canada with our big commodity weight. This is Canada’s time to shine like it did after 2000 all the way up to 2011.
Also, when we do our macro work, we think emerging markets are in the early stages of structural bull markets for the next five to seven years.
Which emerging markets look positive to you?
We like Brazil and we really like China.
Can you discuss a few stocks in your model portfolio where you have large overweight positions relative to the TSX Composite Index?
One stock that we think is extremely timely and has a big relative weighting is Nutrien.
Nutrien topped at just under $150 in early 2022, and it didn’t end up bottoming until the back half of 2024 at about $60. But, in January, 2026, Nutrien has carved out a beautiful three-year base that it just broke out of and that’s measuring it north of $135 in around three years. Not only has it broken out of that absolute base, but it has reversed the three-year relative downturn.
I also like TFI International. It’s a big overweight position relative to the index. I think that’s another very timely chart. Back in 2024, this stock topped out at about $220 and it had what we call a dreaded triple top. So, three times in 2024, it got up to $220 and failed to break through. Then, as we came into 2025, it broke the two-year uptrend on the absolute and relative chart. And then it broke down at $177. It ended up crashing in the spring of last year, it crashed all the way down to $102 and change. But at the end of last year, it carved out a constructive base that we call an ascending triangle. So, it started making higher lows, and the top of that base broke out at the end of last year at $137. We think that this stock is now heading back to where it broke down at $170, $176, and we think it can head back up to $220.
Andrew Willis: Mining companies should be looking for singles, not home runs
Suncor is one of the portfolio’s biggest relative overweights with a 6.25-per-cent weighting in the model portfolio.
We’ve seen this commodity bull market unfold. Gold was the first to breakout. Gold broke out of a massive 40-year cup and handle formation. Gold broke out in the first quarter of 2024 at US$2,100. And gold got all the way up to US$5,600.
Silver broke out of its own 40-year cup and handle just a few months ago at US$50. And over the past few months, silver went parabolic, rising almost up to US$120.
Copper is now breaking out of a 20-year basing formation at the US$5 zone.
Energy has been such a laggard. Oil, WTI, is down in the low US$60’s. We think oil has technically bottomed. Suncor is already breaking out of a 20-year base. So, we think energy has a lot of catch up to do in an ongoing, structural bull market for commodities.
So even though we’ve seen volatility and recent weakness in gold and silver prices, you don’t think that marked an end to the uptrends?
I don’t. Unfortunately, commodities can correct violently in price. The long-term uptrends are still there.
Now, I’m not suggesting that we bottomed and we’re going to start rip roaring again to new highs in the next week or two in gold or silver. I think that they have to consolidate sideways for a while before they can breakout again.
I think that gold can go to US$7,500. And I think that silver can go to US$250 longer term, in three to five years. I think copper can go north of US$10 a pound. Those are longer-term bull market structural targets.
Now, let’s talk about the largest sector underweight in your Canadian large-cap model portfolio - technology. In January, every single technology stock in the S&P/TSX Composite Index realized a negative price return. OpenText (OTEX-T), Kinaxis (KXS-T) and Constellation Software (CSU-T) all posted negative price returns of more than 20 per cent in January and it was the worst performing sector in the S&P/TSX Composite Index, sliding 17.6 per cent last month. How much more downside risk do you see for tech stocks?
We only own two tech stocks in the model, Celestica and Shopify. Going back to the previous quarter, we had an over 6-per-cent weighting in Shopify and we took it down to 3.75 per cent this quarter.
And we took OpenText out of the model in January.
Shopify has had a major near-term breakdown at about Cdn$190 and it looks like it’s going down to trend line support at Cdn$140. So that was one of the reasons we took the weighting down. It’s below its 200-day moving average now.
How much downside risk you see for technology stocks? Is there still more weakness ahead for tech stocks?
Potentially, yes.
If we talk generically about tech stocks, XLK-A, which is the ETF for the S&P 500 technology sector, it’s sitting here at US$140. The 200-day moving average is below US$133, so there’s still downside there for sure.
You have four model portfolios, a U.S. large-cap portfolio, a U.S. mid-cap portfolio, as well as a Canadian mid/small-cap portfolio and a Canadian large-cap portfolio. Of these four model portfolios, which one has the greatest upside potential?
The Canadian mid/small-cap.
Our Canadian mid/small-cap model last year was up almost 51.5 per cent.
Why do you believe your Canadian mid/small-cap model portfolio has the greatest upside potential in 2026?
I think another secular theme we’re going to see is mid/small caps have lagged large caps for so long that I think that they’re going to be outperforming.
So, the key themes for me are commodities, non-US developed markets, emerging markets, and mid-small caps.
Is there anything else that you want to highlight to readers?
Coming into this year, a lot of stocks have had very good runs.
My only caveat would be that a lot of markets are very overbought.
A lot of the three to five-year weekly charts that I look at are pretty extended. It wouldn’t shock me to see some kind of normal bull market pullback play out in the coming weeks. Right now, I wouldn’t be surprised to see better entry points.
But, I still think we’re in a structural bull market, especially for commodities.
This Q&A has been edited for clarity.