Trading Day for Friday, Nov. 28, 2025

Key Concepts

Gross Domestic Product (GDP): A measure of the total value of goods and services produced in a country over a specific period.
Stock Consolidation: A corporate action where a company reduces the number of its outstanding shares, often to increase the per-share price and make the stock more attractive.
Value Investing: An investment strategy that involves buying stocks that appear to be trading for less than their intrinsic or book value.
Quality Focus: An investment approach that prioritizes companies with strong fundamentals, sustainable earnings, and good management.
AI (Artificial Intelligence): The simulation of human intelligence processes by machines, especially computer systems.
Pick and Shovel: A metaphor for investing in companies that supply essential tools or services to a booming industry, rather than the industry itself.
Market Share: The percentage of a market that a specific company controls.
Recurring Revenue: Revenue that a company expects to receive consistently over time.
Bubble: A situation in financial markets where asset prices are inflated far beyond their fundamental value.
Contrarian Investing: An investment strategy that goes against prevailing market trends.
Valuation: The process of determining the current worth of an asset or company.
Duopoly: A market structure in which two firms dominate the market.
Ecologically Friendly Homes: Homes designed and built to minimize environmental impact.
Indigenous Partnerships: Collaborations with Indigenous communities.
Triple Bottom Line: A business concept that includes social and environmental performance in addition to financial profit.
Attribution Science: A field of science that aims to link specific climate events to human-caused greenhouse gas emissions.
GLP-1 Drugs: A class of medications used to treat type 2 diabetes and obesity.

Canadian Economic Performance and Outlook

The Canadian economy experienced a rebound in the third quarter, with Gross Domestic Product (GDP) rising by 2.6% at an annual rate, exceeding expectations. This growth was primarily driven by government spending and residential investment, rather than business investment.

Trade showed signs of weakness, with imports falling by nearly 9%, the largest decline since 2022. This decrease in imports actually inflated the GDP figure. A significant factor in the import decline was a drop in shipments of metals. Exports, however, edged higher.

Despite the third-quarter rebound, Statistics Canada indicated that the economy shrank by 0.3% in October.

Alberta's Economic Forecast: Alberta has revised its 2025 GDP forecast upwards to 2.1% for the current year. Growth is expected to moderate to 1.8% in 2026. A provincial budget update also suggests lower borrowing needs compared to the first quarter, with a projected deficit of $6.4 billion for the 2025-26 fiscal year.

Investment Strategies and Market Commentary

Quality-Focused Value Investing

Jason Del Vicario, Portfolio Manager at Hillside Wealth Management at IA Private Wealth, argues that quality-focused value investing has been out of favor in recent months. He observes a market bifurcation since late summer, where investors have gravitated towards speculative assets like AI and Bitcoin, moving away from predictable, sustainable, high-quality companies with strong returns on equity, often founder-run and founder-owned. Del Vicario emphasizes that "cash is king, cash flow matters," and patient investors will be rewarded long-term.

AI Companies and NVIDIA

Regarding AI companies, Del Vicario expresses a cautious approach. While acknowledging NVIDIA's leadership with an estimated 90% market share, he notes potential concerns about revenue concentration, with reports suggesting over 60% of revenues come from just four customers. The lack of significant service revenue and the infrequent purchase cycle of their products also give him pause, as he prefers companies with frequent customer activity. He states, "we like to bet on the winners once the race has started," and it's not yet clear who the winners will be in the AI trade.

Speculation and Bubbles

Del Vicario believes the market currently feels speculative, citing companies trading at 50 to 100 times earnings or having no profits. However, he adopts a contrarian perspective, suggesting that when everyone is talking about a bubble, it often indicates the absence of one. He believes peak speculation will occur when complacency sets in and everyone assumes only higher prices are possible.

Constellation Software and Albumin

Del Vicario suggests investors might be too hard on Constellation Software. While it was previously richly valued (over 50 times earnings), it has since come down to around 30 times earnings. He notes that adjustments to earnings are needed to assess actual cash earnings. He first highlighted Constellation Software as a top pick in 2014 at around $250. He believes current levels offer reasonable value for those who don't own it or wish to add to their positions. He also mentions Albumin, one of Constellation's spin-offs, which has also seen significant sell-offs. Concerns about Mark Leonard stepping away due to health and the potential for widespread AI software development are seen as overblown, with the shares having sold off more than warranted given the business fundamentals.

Novo Nordisk

Del Vicario views Novo Nordisk, the Danish weight-loss drug giant, as representing tremendous value at current levels. While Eli Lilly has gained market share in the US, Novo Nordisk remains the clear market leader globally in diabetes and obesity care. The stock is down significantly from its all-time highs, trading in the low teens with a reasonable dividend yield. He highlights that it's a 120-year-old company and part of a duopoly, indicating it's not going away. His firm has been accumulating shares over the past few months.

Innovative Housing Solutions for Indigenous Communities

Lynn Lewis, CEO of Renewal Development, discusses an innovative approach to address the acute housing shortage in Indigenous communities, particularly in rural and remote First Nation communities.

Repurposing Homes for Housing

Renewal Development bridges the gap between the thousands of homes being demolished in Metro Vancouver and Greater Victoria for higher-density development and the critical need for good, affordable, climate-resilient housing in remote Indigenous communities. They repurpose homes slated for demolition, taking them to communities in need.

Technical Process of Moving Homes

The process involves:

Assessment: Identifying and assessing homes for condition, quality, and physical movability.
Structural Reinforcement: Adding steel beams below the floor joists.
Lifting: Using a unified jacking system where jacks push on beams, which then lift the home.
Transportation: Attaching dollies to the beams and then to a truck for street transport.
Barge Transport: Homes are often moved by barges to more rural, non-urban communities.

This engineering-intensive process has been around for hundreds of years, evolving from horse and carriage to modern hydraulics and barges. Auckland, New Zealand, is cited as a global leader, moving 1500 single-family homes annually.

Business Model and Cost-Effectiveness

Renewal Development operates as a for-profit company aiming to maximize a triple bottom line (sustainability, social impact, and reconciliation). They provide a service to real estate companies, acting as a demolition company that clears sites. They then provide a product (repurposed homes) to Indigenous or other communities in need.

This model is estimated to be 20-40% more cost-effective than building new housing or bringing in other modular/prefab solutions, especially in remote communities lacking trades, supplies, or local products.

Canadian Economic Data and Analysis

Lindsay Biscay, a reporter, provides further analysis on the Canadian economic data.

Third Quarter GDP and Concerns

While the 2.6% GDP growth in the third quarter surpassed economists' expectations (who predicted 0.5%), Biscay notes that many economists are cautious, seeing the numbers as good "on paper" but with potential for near-term concern. The growth was fueled by housing investment and government spending (particularly defense), along with crude oil exports.

Business Investment Decline

A significant decline was observed in business investment, specifically in non-residential construction, machinery and equipment, and intellectual property products. This is attributed to an environment of uncertainty, likely stemming from trade wars, leading businesses to hold back on investment. The Canadian Chamber of Commerce highlighted a lack of strong domestic demand, with people not spending.

September and October Data

September: Real GDP increased by 0.2%, in line with expectations. Year-over-year growth was 1%, exceeding the predicted 0.6%.
October: Preliminary "flash estimates" suggest a 0.3% contraction in GDP.

Potential for GDP Revision

Statistics Canada anticipates a larger than usual revision to the third-quarter GDP figures in February. This is due to reliance on foreign merchandise trade data, particularly from the US, which was affected by the US government shutdown.

Jemmy Jean's Perspective

Jemmy Jean, Chief Economist and Strategist at Desjardins, commented that the 0.3% contraction in October suggests the current quarter will likely see weak growth, potentially below the Bank of Canada's hope for 1%.

Bay Street and Finance Insights

Christine Dobbie, Canadian Finance Reporter for Bloomberg, discusses upcoming bank earnings and other financial news.

Rising Banker Compensation

With active markets and a pickup in deals, particularly in the US, Canadian banks are expected to report rising variable compensation (bonuses) for their capital markets employees. Year-to-date numbers are tracking about 15% higher than the previous year, with expectations for this trend to continue into the fourth quarter.

Insurance Companies Suing Oil and Gas Industry

A new report from Climate Group Investors for Paris Compliance argues that insurers, governments, or individuals should litigate against polluters for climate change-related damages. This is likened to past lawsuits against tobacco and opioid companies, though with different scientific underpinnings.

Rising Insured Damages: Insured damages in Canada have been increasing due to extreme weather events. In 2024, events like flash floods in Ontario, wildfires in Jasper, and a hailstorm in Calgary resulted in $9 billion in insured damages, triple the previous year.
Attribution Science: While the link between a specific oil and gas giant and a climate event might not be as direct as in other cases, the field of attribution science is growing. Several US states are pursuing legislative changes to allow lawsuits against polluters.

Retail Stock Ideas and Consumer Trends

David Schwartz, Senior Equity Analyst in Consumer Equity Research at Morningstar, offers insights into the retail sector.

Black Friday Sales and Consumer Behavior

Schwartz advises caution in drawing conclusions about Black Friday sales before the holiday period concludes, as good data is hard to obtain. He notes that while some shoppers are underwhelmed by discounts not offsetting price increases, others are drawing crowds to specific brands.

Retail Stock Recommendations:

Nike: Despite two difficult years reflected in its stock price, Schwartz sees potential. Nike's strengths include its connection to global sports, a new CEO moving the company in the right direction, and a focus on quality performance products. The company is also working to improve relationships with wholesale partners. His fair value estimate is $104 a share.
Lululemon: While Lululemon has had a difficult year, its numbers remain strong, generating high margins and benefiting from a direct-selling model. Concerns about slowing growth in North America and the China market exist. However, Schwartz believes the stock is undervalued at his fair value estimate of $295 a share. He notes the company has no debt and generates significant cash flow. He acknowledges increased market competition but believes Lululemon's strong following and upcoming new products will resonate with consumers.
Gildan: Gildan is poised to close its acquisition of Hanesbrands, a major underwear and basic apparel manufacturer, which will significantly impact its consumer business. While known for print wear (blank shirts), Gildan will become a major player in branded basics. Schwartz believes this is a transformative acquisition that is being undervalued by the stock market. His valuation for Canadian shares is $128 Canadian.

Broader Retail Trends

Income Disparities: Retailers catering to lower-income and higher-income consumers are doing well, while the middle class is struggling, particularly in the US. Department stores and retailers targeting the middle class are experiencing weakness.
Strength in High and Low Income Segments: Retailers like Ralph Lauren and Urban Outfitters (higher income) and Ross and TJ Maxx (lower income) are performing well.

Canada Post and Small Business Reliability

Dan Kelly, President of the Canadian Federation of Independent Business (CFIB), discusses the impact of potential Canada Post disruptions on small businesses.

Tentative Agreement and Relief

The recent tentative agreement between Canada Post and its union has provided a "giant relief" to businesses relying on the postal service for shipping and advertising mail during the holiday season.

Distrust and Capacity Issues

Past Impact: During the 2020 postal strike, small businesses lost an estimated $1 billion due to increased costs or lost sales. Private couriers lacked the capacity to absorb the volume.
Lingering Distrust: 13% of small firms stated they would never use Canada Post again after the 2020 strike. This year, almost two-thirds indicated they would leave Canada Post for good if another significant strike occurred.
Ongoing Uncertainty: Despite the tentative agreement, there's still distrust, and some businesses are temporarily moving away from Canada Post due to uncertainty about future outages.

Broader Labor Disruption Context

Kelly links these issues to a broader trend of increased strikes in Canada, particularly affecting critical transportation infrastructure. He attributes this to federal government changes in labor law over the past decade, which have given unions more power. This has led to a reputation of Canada as an unreliable trading partner due to disruptions at ports, railways, airlines, and Canada Post.

Lessons from Other Postal Services

Kelly suggests reforms are needed, including reducing the frequency of mail delivery and increasing the frequency of package delivery, reflecting the changing needs of the market. He notes that the federal government has historically put brakes on these necessary reforms.

Optimism for Canada Post's Future

Kelly expresses optimism due to three factors:

The union recognizing the changing game.
Canada Post presenting a potentially acceptable deal.
The government signaling willingness to allow cost-cutting reforms for Canada Post's sustainability.

He emphasizes that Canada still needs a postal service for national distribution, especially for small firms relying on it for low-cost delivery, particularly to remote and rural communities where private couriers often use Canada Post for final-mile delivery.

Black Friday Shopper Sentiment and Retail Operations

Emily Cohn, a Bloomberg reporter, provides insights into Black Friday shopping trends.

Shopper Underwhelm

Generally, shoppers have been underwhelmed by Black Friday deals, feeling that discounts did not sufficiently counteract price increases seen throughout the year.

Crowds at Specific Retailers

Despite general underwhelm, stores like Addidas, Hollister, and Bath & Body Works, which have a strong presence on TikTok and a following among teens and young adults, drew significant crowds.

Consumer Budgeting and Prioritization

Consumers are budgeting more rigorously this year, using spreadsheets to track prices and adhere to budgets. They are also prioritizing stocking up on essentials like sunscreen and mascara while on sale, indicating a focus on necessary purchases.

Staffing Shortages and In-Store Experience

There are signs of staffing shortages, with fewer cash registers open and longer lines. This makes it harder for shoppers to find assistance. The competition from online retailers like Amazon, where purchases can be made instantly, exacerbates this issue. Retailers like Apple are highlighted for their effective use of handheld devices for checkout, improving the in-store experience.

Market Performance

TSX Composite: Reached a new record high, boosted by precious metals stocks, particularly silver shares, which have surged following a record high in the spot price of silver.
US Markets: Showing signs of strength.
S&P 500: Not yet at a record high but showing strength, with Intel, Sandisk, Western Digital, and Moderna seeing buying interest.
Eli Lilly: Experienced selling pressure, potentially linked to reports of Americans postponing GLP-1 diet suppression shots to indulge in Thanksgiving feasts.