Equity analysts at Desjardins Securities revealed their top stock picks for 2025 on Thursday, warning the outlook for the year ahead is cloudy and investors should proceed with caution after enjoying steep gains in 2024.
“Exiting 2023, many had expected the anticipated pullback in interest rates would drive strong equity returns and buoyant capital markets activity—we were half right,” they said. “While we were rewarded with a more resilient economy than expected, the general view for rate cuts at a very high level was only partially realized and equity issuances were once again muted relative to historical standards. We made it through the ups and downs of another U.S. election, with the incoming Trump administration setting expectations of tailwinds from Fed easing and lighter regulation. Over the year, markets reacted accordingly as equities again rallied significantly. 2024 was a second consecutive year of strong returns, with the NASDAQ (up 30 per cent plus), S&P (28 per cent) and, to a slightly lesser degree, the TSX (23 per cent) all benefiting investors (2023 saw returns of 33 per cent, 18 per cent and 8.5 per cent, respectively) — this was certainly welcome following a very challenging 2022 (down 33 per cent, down 18 per cent and down 8.5 per cent, respectively).
“What can we expect for 2025? Great question! Some predict another strong stock market performance while others suggest a more cautious outlook is warranted—regardless, inflation, rates, politics and the economy remain in focus yet again. Who knows, maybe conditions are finally right this year for the business of capital markets to reopen in earnest after a long hiatus.”
Royce Mendes, the firm’s managing director and head of macro strategy, said the macroeconomic view in Canada can be summed up as “choose your own adventure.”
“Just because the stock market ripped in 2024 doesn’t mean that a correction is near—it doesn’t even mean that price growth will return to its long-run average,” he said. “The long-run average, which is often quoted as the return that investors should expect, is misleading. More often than not, stocks provide well-above-average annual returns, with an occasional plunge in prices creating an average that is rarely representative of the annual return from equities. Bearing that in mind will be key to navigating 2025.
“For 2025, our equity projections needed to incorporate a variety of outcomes for the global economy and markets. Our team has gamed out three different scenarios, with the most optimistic seeing the US tariffs used sparingly, if at all. That would give central banks around the world the freedom to pursue economic stabilization policies without worrying about the effects on inflation from tariffs. However, with Mr Trump already threatening to slap America’s closest trading partners with tariffs, markets have been forced to price in some degree of protectionism. Companies that are heavily trade-exposed, particularly those with complex supply chains, have already seen an impact in their equity performance. Removing that threat would enable global markets to rally even further, particularly if Mr. Trump still pursues both an expansionary fiscal policy and an easier regulatory environment. Such an outcome could see stocks put up another banner year, posting well-above average returns once again.”
Desjardins’ analysts selected 23 equities that should be on investors’ radar in 2025. They are:
Consumer Staples/Consumer Discretionary
* Gildan Activewear Inc. (GIL-T) with a “buy” rating and $82 target. The average on the Street is $76.01.
Analyst Chris Li: “Despite its strong performance (56 per cent year-to-date), valuation remains reasonable at 14 times NTM EPS [next 12-month earnings per share] (below 15 times average). We believe GIL is well-positioned to achieve another year of 15-per-cent EPS growth next year. At a minimum, share price appreciation should mimic EPS growth, with upside from further multiple expansion supported by investors’ increased confidence in GIL’s earnings consistency and improved execution under the new board and incumbent management team. While an economic downturn is a key risk, we believe GIL would be able to offset the impact with continuing market share gains from weaker competitors, product innovation, new program wins, etc. Two other common pushbacks are a normalization in share buybacks in 2025 (4–5 per cent vs 10 per cent in 2H24) and partial selling by several activist shareholders. We believe these concerns will be resolved with solid earnings performance.”
Diversified Industries
* Boyd Group Services Inc. (BYD-T) with a “buy” rating and $260 target. The average is $264.
Analyst Gary Ho: “We are bullish on BYD based on (1) easy comps in 2025 vs a softer demand environment in 2024; we are seeing signs of an early rebound in used vehicle prices while margins should benefit from greater internalization of scanning/calibration; (2) normalization of the winter season, which should provide a decent start to 2025; (3) its commitment to greenfield/brownfield buildouts with potential margin uplift in the medium term; and (4) attractive valuation (trading below its five-year range), with a new five-year outlook expected by 1H25.”
* Brookfield Business Partners L.P. (BBU-N/BBU.UN-T) with a “buy” rating and US$34 target. The average is US$31.71.
Mr. Ho: “We continue to favour BBU in the diversified financials space given (1) key monetization catalysts yet to play out—the dual-track process on its largest asset, Clarios, provides optionality; (2) the strong foundation at its second largest asset, Sagen, with 20-per-cent operating ROE and favourable housing tailwinds; (3) capital allocation priorities—debt paydown followed by share buybacks and opportunistic deployments into new investments; (4) attractive valuation — trading at a 42-per-cent discount to its intrinsic NAV; or stated another way, we believe Clarios and Sagen combined equate to BBU’s share price today (if not more).”
* 5N Plus Inc. (VNP-T) with a “buy” rating and $8.75 target. The average is $9.
Analyst Frederic Tremblay: “We like VNP due to (1) the ongoing global secular shift in supply chains, which means that the specialty semiconductors and performance materials produced at VNP’s North American and European facilities should continue to be highly sought after in critical industries in the western world; (2) U.S. concerns (including tariff impact) seeming overblown; (3) its positive track record as it relates to guidance; (4) its looking to repeat past success on the M&A front; and (5) valuation remaining attractive and our belief that solid execution should contribute to a continuation of the rerating.”
Financial Services
Banks
* Canadian Imperial Bank of Commerce (CM-T) with a “buy” rating and $100 target. The average is $94.07.
Analyst Doug Young: “There are several themes we like with CM. First, management has embarked on a mission to not surprise the market, which we obviously endorse. Second, the bank has executed on its strategy of delivering steady NIMs, effective expense management resulting in positive operating leverage and steady PCLs now that its U.S. CRE challenges have been dealt with. Third, the CET1 ratio has improved, and we believe CM is well-positioned to continue buying back stock. During 4Q FY24, it was the only Canadian bank which bought back a material amount of stock. If it can continue to deliver on the above, we believe the stock works through FY25, and therefore it has moved into pole position in our bank ratings.”
* Royal Bank of Canada (RY-T) with a “buy” rating and $190 target. The average is $178.26.
Mr. Young: “This is our second pick and is more defensive in nature. First, it boasts strong franchises across Canadian banking, wealth management and capital markets. Second, with the integration of HSBC Canada, we expect further realization of expense and revenue synergies. Third, its capital markets division is wellpositioned to capitalize on the revival of dealmaking and IPOs. Yes, the bank trades at a premium multiple—however, it always has and we believe it always will. We view RY as a core holding.”
Lifecos
* Sun Life Financial Inc. (SLF-T) with a “buy” rating and $95 target. The average is $88.83.
Mr. Young: “There are four themes we like. First, its medium-term underlying ROE target of 20 per cent (was increased at the most recent investor day), which is peer-leading (compares favourably with Canadian banks). Second, we see several earnings growth drivers over the coming year—DentaQuest (DQ) in the US, getting to scale and momentum in Asia, SLC Management hitting its stride and potential capital deployment. Third, by our math, SLF has approximately $9-billion in excess capital and debt capacity, and generates an attractive amount of excess capital annually, partially from MFS. Fourth, MFS has been performing well even in volatile equity markets.”
* Manulife Financial Corp. (MFC-T) with a “buy” rating and $50 target. The average is $46.40.
Mr. Young: “There are three themes we like with the MFC story, and if management can deliver on them, we believe there is room for further valuation multiple expansion: (1) core earnings growth across its Asia franchise; (2) reinsure more of its lower ROE legacy businesses; and (3) buy back stock. It’s as simple as that!”
Industrials/Transportation & Aerospace
* AtkinsRéalis Group Inc. (ATRL-T) with a “buy” rating and $91 target. The average is $83.67.
Analyst Benoit Poirier: “In Engineering & Construction, ATRL remains our favourite name, and we have increased our target to $91 (from $87) as we carve out the nuclear business in our SOTP valuation. We see greater potential in this turnaround story despite the share price increase due to: (1) re-rating opportunities; (2) completion of LSTK work; (3) monetization of non-core assets; (4) a high-growth nuclear business; (5) lower relative U.S. exposure; and (6) the most attractive potential return in our E&C universe. For those who are more skeptical of the nuclear trend, WSP remains a solid alternative and is #2 in our pecking order. Moreover, we view E&C as the best positioned sector in our coverage universe entering 2025. We like the setup for several reasons—clean balance sheets (all four companies at leverage of 1.5 times or below), expected interest rate cuts boosting construction activity, margin upside from high-value/low-cost centres, low material risk of US infrastructure spending cuts and the sector’s safety net against tariff risk.”
* Bombardier Inc. (BBD.B-T) with a “buy” rating and $145 target. The average is $119.73.
Mr. Poirier: “In Aerospace & Defence, BBD remains our top pick due to the resetting of FCF expectations and an anticipated demand increase for bizjets post the Trump win. The undersupplied market should continue to drive pricing and aftermarket growth. We see the recent share price drop as an overreaction and expect tariff exemptions for the A&D industry. With leverage expected to fall below 2.0 times by the end of 2025, BBD is poised for re-rating and increased institutional interest. We also expect BBD to be a significant beneficiary in a declining interest rate environment (being a higherbeta name and still being perceived by investors as highly levered).”
* TFI International Inc. (TFII-T) with a “buy” rating and $236 target. The average is $202.61.
Mr. Poirier: “In Transportation, we have upgraded TFII to Buy (from Hold) and increased our target to $236 (from $204). We now consider this our top pick in the sector for the following key reasons: (1) lowered and more realistic expectations for 2025 and beyond; (2) improving cycle fundamentals (tender rejection and spot rates rising), with early signs that the freight recession may be coming to an end; (3) attractive valuation vs peers; and (4) decreased leverage (1.1x in 2025) enabling the return of capital deployment toward buybacks and M&A.”
Metals & Mining
* Ora Mining Ltd. (OLA-T) with a “buy” rating and $10 target. The average is $8.32.
* Probe Gold Inc. (PRB-T) with a “buy” rating and $3.75 target. The average is $3.07.
Analyst Allison Carson: “For 2025, our top producer pick is OLA and our top developer pick is PRB. We like OLA as it will become a multi-asset, mid-tier producer in 2025, with its Musselwhite acquisition expected to close in January. We also expect a positive change in the permitting environment in Mexico, which should allow the company to receive its layback permit at Camino Rojo. We expect PRB to continue to demonstrate exploration upside to its already robust 10moz resource in 2025 and to complete a PFS at its Novador project, continuing to derisk the project and moving it toward a construction decision. For investors looking for exposure to silver, we prefer AYA, a pure-play silver company which is expected to declare commercial production at its new 2,000tpd plant prior to year-end.”
Oil & Gas
* ARC Resources Ltd. (ARX-T) with a “buy” rating and $35 target. The average is $31.87.
Analyst Chris MacCulloch: “We reiterate ARX as our overall top pick in the Canadian energy sector. Despite strong performance in 2024 whereby the stock advanced by 24 per cent year-to-date (prior to factoring in dividends), we believe the company is primed for another strong showing in 2025. Last year’s bullish thesis primarily centred on the financial impact of Attachie Phase I — a statement which still holds true, with the project expected to deliver a massive boost to corporate FCF in 2025 following its recent commissioning earlier this fall. In the absence of material capital spending associated with Attachie Phase II, which is not expected to commence until 2026, incremental FCF will be allocated toward shareholder pockets through the recently enhanced base dividend (3.1-per-cent yield) and share repurchases, the latter of which are expected to land above the $1.0-billion level next year based on current strip prices. For context, this pace of buybacks could retire more than 7 per cent of total outstanding shares on a fully diluted basis. ARX thus continues to offer one of the most compelling value propositions within the Desjardins E&P coverage universe, currently sporting a 4.7 times strip EV/DACF multiple (2025E) — a nearly two-turn discount vs the large-cap peer group (6.5 times) — along with the second-highest capital return yield (9.7 per cent) and the top total shareholder return (21.7 per cent) under coverage.”
* Cenovus Energy Inc. (CVE-T) with a “buy” rating and $30.50 target. The average is $31.67.
Mr. MacCulloch: “To say that CVE disappointed our expectations as a top pick in 2024 would be a severe understatement. The company delivered a series of lacklustre results from its downstream manufacturing segment, which propelled a wave of negative sentiment which continues to weigh upon the stock. The results were particularly galling within the context of consistently strong operational and financial performance by the company’s three largest Canadian competitors (CNQ, IMO and SU), which drove funds flow out of the stock. That said, we continue to believe the core upstream business remains fundamentally sound, underpinned by best-in-class thermal oil sands assets and an offshore segment poised to deliver robust organic production growth moving into the back half of the decade.”
Power & Utilities
* Boralex Inc. (BLX-T) with a “top pick” designation and $46 target. The average is $42.
* Capital Power Corp. (CPX-T) with a “buy” rating and $64 target. The average is $60.90.
* Innergex Renewable Energy Inc. (INE-T) with a “buy” rating and $14 target. The average is $11.80.
Analyst Brent Stadler: “BLX remains our Top Pick given our view that it has a robust pipeline of contracted projects that should enable it to be the top grower in the space. CPX remains a favourite name as we continue to believe a lot of value can be unlocked as the company recontracts its gas fleet in the U.S. and executes on a technology company partnership — we believe execution can take it above $75.00. INE took decisive action in 2024 to reset expectations and allocate more cash flow to growth, which should position it for success in 2025 and beyond. We believe its valuation is extremely attractive at current levels.”
Real Estate
* Chartwell Retirement Residences (CSH.UN-T) with a “buy” rating and $18 target. The average is $18.25.
Analyst Lorne Kalmar: “Given the fundamental outlook for seniors homes in Canada, we believe this is an asset class that all investors should have exposure to. As one of Canada’s largest owners/operators and the only publicly traded pure-play retirement home portfolio, we believe CSH is the best way for investors to gain exposure to the accelerating demand for seniors residences. CSH has exposure to Canada’s four largest provinces and improved on its reputation as an operator through the post-pandemic recovery, in our view. We are forecasting 11-per-cent SP NOI growth in 2025; we expect occupancy and NOI margins to continue climbing toward, and ultimately exceed, pre-pandemic levels.”
* Dream Industrial REIT (DIR.UN-T) with a “buy” rating and $16.50 target. The average is $16.05.
Analyst Kyle Stanley: “With Canadian industrial fundamentals softening over the past 18–24 months, investor focus had shifted away from the asset class. While we expect industrial fundamentals to improve through 2025, our earnings outlook for DIR does not require it. We forecast a resumption in high-single-digit SP NOI growth (7 per cent), driven by: (1) annual contractual rent growth (3 per cent); (2) an average 45-per-cent leasing spread on 4.2msf of lease maturities (11 per cent of GLA); and (3) contributions from development deliveries ($288-million of projects at a 6.4-per-cent yield). With 100bps of occupancy gains assumed by year-end (mid-96-per-cent range) and refinancing activity on $850-million of debt maturities weighted to 4Q, we believe DIR can deliver low-risk FFOPU growth of 10 per cent in 2025.”
* RioCan REIT (REI.UN-T) with a “buy” rating and $23 target. The average is $21.98.
Mr. Kalmar: “REI’s retail portfolio has continued to put up record numbers through 2024. While SP NOI was impacted by tenant departures early in the year, those spaces have been backfilled and should represent a tailwind in 2025. In 3Q24, REI reported another quarter of record-high retail occupancy at 98.6 per cent while renewal spreads remained at elevated levels not seen in more than a decade. Furthermore, REI has been successful negotiating more favourable lease terms (fewer restrictions, better covenants, etc) as high-quality space remains in short supply, underscoring the increased bargaining power of retail landlords”
Telecom, Media & Tech
Telecoms
* Telus Corp. (T-T) with a “buy” rating and $26.50 target. The average is $24.12.
Analyst Jerome Dubreuil: “Further analysis on the benefits of maintaining the lowest capital expenditure intensity in the industry suggests that the valuation gap between T and its peers is not sufficiently wide. We also believe T has enough organic growth potential within its asset portfolio to enable management to focus on deleveraging in 2025. Although we do not necessarily expect that T will outperform the market as a whole (being the most expensive stock in a challenged industry has risks), we believe it is a relatively clean story for 2025.”
IT Services
* CGI Inc. (GIB.A-T) with a “buy” rating and $178 target. The average is $168.86.
Mr. Dubreuil: “With discretionary spending still under pressure and customer delays still present, we prefer lower-beta stories. We believe CGI’s high-single-digit EPS growth and its significant amount of dry powder for M&A are attractive, even if prospects for the US government vertical are foggier than usual.”