BMO BMO chief strategist Brian Belski took a victory lap after his adamant prediction that Canadian stocks would outperform the S&P 500 came to fruition,
“The TSX has now outperformed the S&P 500 by almost a 100 bais points over the last six months and over 300bps over the last three months. While strong performance in Canadian Technology and Financials have been key to recent outperformance, most sectors have posted solid gains over the last five months as Canadian equities started to rally … Our 2024 Market Outlook for Canada was titled ‘The Return of ‘Tigger’,’ as we believed AND still believe Canada is well positioned to shift from a more timid/defensive “Eeyore” environment to an offensive ‘Tigger’ market … Overall, we believe that the Canadian recovery trade remains in its early stages, with Canada set to hit new all-time highs throughout 2025. In our opinion, the core drivers and fundamental underpinnings behind Canada’s stock market recovery in 2024 are likely to continue to define 2025 Canadian equity performance. As such, as monetary policy continues to ease, equity flows broaden out and earnings growth converges with the US, we believe the TSX can and will attain higher prices with a 2025 year-end price target of 28,500 on earnings of $1600”
Mr. Belski recommends consumer discretionary stocks – Aritzia, Canadian Tire, Dollarama and Restaurant Brands International are “favoured BMO ideas” – Financials (TD Bank, Royal Bank and Manulife Financial), Technology (Shopify, Celestica, Constellation Software, CGI Group) and real estate (Canadian Apartment Properties REIT)