Top utility and power stock picks for 2026 from a Desjardins analyst

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

Power and utilities

Desjardins analyst Brent Sadler published his year-ahead report for domestic power and utilities stocks,

“Highlights BLX remains our Top Pick, CPX remains a preferred name and we have added AQN as a preferred name. BLX remains our Top Pick as it trades at a significant discount to our NAV with a cash flow inflection into 2026, coupled with a robust pipeline of contracted projects that should enable it to be a top grower in the space. CPX remains a favourite name as we expect it will continue to create significant value for shareholders through recontracting its gas fleet in the US (including with AI/data centres) and US M&A should drive highly accretive growth—all providing multiple expansion opportunities. On AQN, we expect recent leadership changes should drive success. We see EPS growing at a more than 20-per-cent CAGR [compound annual growth rate] to 2027 with room for a guidance increase in 1H26 while trading at an attractive 15.2 times P/E (2027) multiple. We also find the Missouri Commission’s comments to be positive for AQN’s outlook. We continue to view H as having best-in-class defensive attributes and growth and being a place investors can flock to when looking for a high-growth defensive name. We view FTS as a defensive utility but with exposure to exciting load growth thematics that could drive upside to the capital plan including AI/data centres, onshoring and long-term transmission projects. Recent ACC approval of FTS’s data centre project further improves its growth outlook. BEP’s outlook remains positive, and we expect it to continue deploying capital into attractive opportunities, taking an all-of-the-above technology approach to meeting power demand while executing on its capital recycling initiatives (crystallizing value for shareholders and funding growth). It could also expand upon/announce additional technology company partnerships”

Bargains

CIBC analyst Sid Mokhtari went looking for post-tax loss selling bargains,

“Every December, tax-loss harvesting creates transient selling pressure on some stocks that may be fundamentally strong but are temporarily down for idiosyncratic reasons or a change of macro narratives. This report attempts to comb through some of the TSX tax-loss candidates (2025) that have sharply fallen relative to their fundamental valuation and present an opportunity for bargain hunters. The companies mentioned in this report are fundamentally ranked as sector Outperformers at CIBC, and while exhibiting negative price momentum, are flashing weekly-monthly oversold characteristics. When fundamental strength and oversold mean-reversion factors are aligned, historically the next likely development is a positive mean-reversion period … The following companies are fundamentally ranked as sector Outperformers and in our view appear on sale from a positive mean-reversion perspective: Boralex (BLX), Brookfield Asset Management (BAM), Constellation Software (CSU), FirstService Corp (FSV), TFI International (TFII), and Thomson Reuters (TRI)”

Impact of volatility

J.P. Morgan strategist Mislav Matejka believes some market anomalies are being corrected by recent volatility,

“Over the past two months we have been pointing to stretched positioning, to the big gap that opened up between beta plays and bond yields, and certain AI trade digestion concerns. Encouragingly, the beta - bond yields gap has halfway closed and positioning appears to have cleaned up somewhat. Clearly, the perception of more hawkish Fed weighed on risk sentiment in early November, and the equity rebound since 2nd half of November was helped by money markets back to pricing in the full December cut at this week’s meeting – page 6. We believe that the dovish Fed will remain a medium-term support for equities, but there could be some travel and arrive post this week’s event, given that the cut is now fully in the price, and equities are back to highs, therefore investors might be tempted to lock in the gains into year end, rather than be adding directional exposure. Extending the horizon into 2026, we believe the growth-policy tradeoff will be bullish for risk assets. Inflation could be checked by subdued Brent, decelerating services prices and wages, as well as some potential watering down of tariffs”

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