Market Call: Greg Newman's outlook on North American Equities (May 28, 2026)

Key Concepts

• Earnings Growth: The primary driver of the current market rally, overriding macroeconomic concerns like interest rates and geopolitical instability.
• Bifurcated Market: A clear distinction between "haves" (stocks with strong capital inflows and momentum) and "have-nots" (stocks currently struggling with sentiment or AI-related fears).
• AI Integration: The use of Artificial Intelligence to drive operational efficiency, cost reduction, and productivity in sectors ranging from engineering to finance.
• Nation Building: A trend in Canada involving significant infrastructure, pipeline, and energy investment, attracting foreign capital.
• PEG Ratio (Price/Earnings-to-Growth): A valuation metric used to determine if a stock is undervalued relative to its growth rate.

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1. Market Outlook and Macro Perspective

Greg Newman notes that despite geopolitical tensions (Iran) and "lighter" U.S. GDP data, the market rally is sustained by phenomenal earnings growth (projected at 24% for the current year and 12–14% for next year).

• Resilience: North American companies have adapted to higher input costs (e.g., oil), allowing them to maintain margins.
• Canadian Market: While Canada faces vulnerabilities regarding interest rates and an anemic job market, it is benefiting from a "nation-building" surge in infrastructure and energy, which is attracting foreign investment for the first time in 15 years.

2. Sector Analysis and Stock Opinions

Engineering and Infrastructure

• Bird Construction (BDT): Currently "on fire" with an $11 billion backlog and a new AI data center contract with BCE. While technically overbought, it remains a strong growth play at 16x 2027 earnings.
• WSP Global & AtkinsRéalis (ATRL): Viewed as the "inverse" of Bird in terms of sentiment. Newman argues these are currently better buys than Bird due to lower valuations (12.5x and 14x PE respectively) and 17% projected growth.
• Stantec (STN): A top pick. Newman highlights its strong balance sheet and capital deployment optionality. He views the recent dip as an opportunity to buy a company that is "too cheap" and potentially nearing share buybacks.

Financials and Insurance

• Power Corporation: A strong holding company with valuable assets like Wealthsimple and Rockefeller. Newman suggests waiting for a $4–$5 pullback before adding.
• Sun Life Financial: Currently at the top of its range. Newman prefers the banks over insurance at this time, noting that Sun Life faces challenges in dental and Canadian operations.
• Canadian Banks: Despite recent earnings beats, stocks sold off due to "buy the rumor, sell the news" dynamics. Newman remains bullish, noting that banks are buying back shares, which signals management confidence.

Technology and Defense

• Abaxx Technologies: A high-risk, growth-stage play. Newman compares its potential to the early days of the ICE exchange. He advises holding patiently rather than trading, as it is not expected to be EPS positive until 2028–2029.
• Microsoft (MSFT): A top pick among the "Magnificent Seven." Newman argues that the market is underestimating the acceleration of Azure growth and the adoption of 365 Copilot. He emphasizes buying when the PEG ratio is below 1.0.
• Defense (Lockheed Martin/ITA ETF): Newman prefers the ITA ETF (or Canadian-hedged XID) to gain exposure to the defense sector, citing the currency hedge as a strategic advantage.

3. Methodology and Investment Framework

• Contrarian Approach: Newman advocates for buying high-quality companies when they are "in doubt" or "stalling out" (e.g., Microsoft, Stantec).
• Valuation Discipline: He emphasizes looking for "growth at a reasonable price" (GARP). He warns against buying stocks when they are "screaming" (at all-time highs) and suggests using limit orders or selling puts to enter positions at lower strike prices.
• Currency Strategy: For Canadian investors, he prefers US-dollar-hedged instruments to avoid working against currency fluctuations.

4. Notable Quotes

• "Earnings growth is the factor that is overpowering all else at this time." — Greg Newman, on why the market is rallying despite macro headwinds.
• "You want to buy the good ones when they're stalling out." — Newman, regarding his strategy for high-quality stocks like Alimentation Couche-Tard.
• "I don't see AI actually building these buildings... these firms will be beneficiaries of those tools to lower their costs and increase their efficiencies." — Newman, on the role of AI in the engineering sector.

5. Synthesis and Conclusion

The current market environment is characterized by a "bifurcated" reality where strong earnings growth is driving indices higher despite valid concerns regarding interest rates and geopolitical shocks. Newman’s actionable advice centers on identifying high-quality "have-not" stocks—companies with strong fundamentals that have been unfairly punished by sentiment or sector-specific fears. His top picks (Definity Financial, Stantec, and Microsoft) reflect a strategy of prioritizing companies with clear paths to margin expansion, capital deployment optionality, and reasonable valuations relative to their growth trajectories.