Market Call: Andrey Omelchak's outlook on North American small & mid-cap equities (April 22, 2026)

Key Concepts

Nation Building/Infrastructure Build-out: Large-scale investment in power grids, electrical capacity, and data centers.
Sovereign AI: The practice of isolating AI systems from the public internet to protect sensitive data and maintain security.
Mission-Critical Software: Software that is deeply integrated into business operations, making it less susceptible to AI-driven disruption.
Vertical Market Software (VMS): Specialized software tailored to specific industries, often characterized by high customer retention.
Free Cash Flow (FCF) Yield: A valuation metric used to assess the cash-generating efficiency of a company relative to its market price.
Operating Leverage: The degree to which a company can increase operating income by increasing revenue, often through fixed-cost efficiencies.

1. Market Themes and Investment Philosophy

Andre emphasizes staying invested rather than attempting to time the market, noting that retail investors who "go in and out" consistently underperform. Current market drivers include:

AI Infrastructure: The massive build-out of data centers is creating a shortage of power and electrical grid capacity.
Defense Spending: Global geopolitical conflicts are driving record-breaking defense budgets.
Sovereign AI: Governments and corporations are increasingly cautious about AI, implementing "Chinese walls" to ensure internal data remains isolated from the broader internet to prevent security breaches.

2. Company Analysis and Stock Perspectives

Telecommunications & Financials

TELUS: Andre expresses concern regarding high leverage and a high dividend payout ratio. He suggests a dividend cut may be necessary to allow new management to focus on growth initiatives like telehealth.
EQB Inc. vs. Royal Bank: While Royal Bank is a "safe bet" for stability, Andre favors EQB for its agility, digital-native business model, and higher organic growth potential over the next 3–5 years.

Construction & Engineering

WSP Global: Initially a concern due to AI disruption fears, Andre now believes the sell-off is overdone. He views WSP as a beneficiary of the data center build-out and expects margin expansion.
Bird Construction: Bullish outlook due to a 45% year-over-year backlog growth and direct exposure to "Build Canada" infrastructure projects. He advises against trimming, noting the company is trading at an attractive multiple when looking two years out.

Software & Technology

Lumen Group: Preferred over Constellation Software. Andre highlights that Lumen is highly vertically integrated and "mission-critical," making it the least exposed to AI disruption.
Microsoft: While he focuses on small/mid-caps, he views Microsoft as a core holding with immense pricing power. He notes that while "Co-pilot" is still maturing, their Azure growth remains strong.

Specialized Services

Propel Holdings: Distinguished from "GoEasy." Andre notes Propel has higher transparency and better visibility on loan payback, making it a "buy on the pullback."
Well Health: Currently in a transformation phase. The goal is to divest unprofitable US operations by year-end to focus on their high-performing Canadian clinics.
Premium Brands: Andre is cautious due to "stumbles" in filling excess capacity in the US and concerns regarding aggressive accounting practices.

3. Past Picks Review

Electrovaya (ELVA): Up 63%. Andre remains bullish, citing their leadership in battery safety and longevity, and their expansion into defense and warehouse automation.
TFI International: Up 41%. Andre exited the position to reallocate capital, despite acknowledging the company’s strong operational improvements.
MATR: Down 17%. Andre exited due to elevated leverage and lack of near-term catalysts, though he views it as a potential long-term value play.

4. New Top Picks

Magellan Aerospace (MAL): An "undiscovered" defense/aerospace play with high insider ownership. Defense now accounts for 30% of revenue, with potential to reach 50%. It is noted as one of the cheapest stocks in the sector.
Stingray Group (RAY): A streaming media company with three verticals (audio/video, in-car entertainment, and retail). It offers a double-digit FCF yield and is a potential takeover candidate.
Black Diamond Group (BDI): Directly exposed to "nation building." They provide mobile housing units for large infrastructure projects. The company is highly profitable, has high insider ownership, and is currently undervalued.

5. Synthesis/Conclusion

The overarching investment strategy presented is to focus on "Nation Building"—companies that provide the physical and digital infrastructure required for modern defense, power, and logistics. Andre advocates for identifying companies with high insider ownership, mission-critical business models, and clear paths to margin expansion, while remaining wary of companies with high leverage or those easily disrupted by AI. He emphasizes looking 2–5 years ahead rather than focusing on short-term volatility.