Christine Poole's Top Stock Picks for January 19, 2026: Microsoft, Visa, Fortis

Christine Poole, Co-Chief Investment Officer, Davis Rea Focus: North American Large Caps Top picks: Microsoft, Visa, Fortis MARKET OUTLOOK: Looking ahead to 2026, several tailwinds appear supportive for equities: greater clarity around tariff policies, lower interest rates across many economies, government-led fiscal stimulus, and increased capital spending driven by artificial intelligence (AI) investment and onshoring efforts. Businesses are also in the initial stages of realizing productivity improvements from integrating AI into their operations. Canada’s economic resilience in 2025 was largely underpinned by the The Canada-United States-Mexico Agreement (CUSMA), which has kept nearly 90 per cent of exports to the U.S tariff-free. Formal discussions to extend the agreement beyond its 2036 expiry are expected to begin this summer and could introduce periods of market volatility. While trade-related uncertainty is likely to persist through 2026, we anticipate gradual progress in reorienting the Canadian economy toward new products and a more diversified set of trading partners. With the current rate-cutting cycle nearing completion, fiscal policy is poised to become the primary driver of future growth, supporting both near-term demand and the structural adjustments required to rebalance goods trade with other regions. The K-shaped nature of the U.S. economy is expected to persist into 2026. Higher-income households, particularly those with significant exposure to stocks and real estate, have benefited disproportionately from rising asset prices and continue to account for an outsized share of consumer spending. Many Baby Boomers born between 1946 and 1964 - now roughly 62 to 80 years old - fall within this group. Although growth in their disposable may be modest, rising net worth has bolstered their confidence to spend, contributing to a gradual decline in personal savings rates. In contrast, lower-income households remain under pressure from sticky inflation, especially for essential items such as food and housing, alongside soft labour market conditions that are most acute among younger workers. President Trump’s recent decision to exempt a broad range of food and agricultural products from tariffs as well as for government agencies to purchase of mortgage-backed securities directly reflects growing concerns over household affordability. The One Big Beautiful Bill Act (OBBBA), enacted in July 2025, is expected to provide a meaningful boost to the U.S. economy in 2026, primarily through a surge in tax refunds and renewed business incentives. Because the legislation was passed mid-year but applied many tax cuts retroactively to Jan. 1, 2025, most workers will experience the benefits as lump-sum payments when tax refunds are issued in April this year. This timing is likely to deliver a notable lift to disposable income and near-term consumer spending. With valuation metrics elevated relative to historical averages, corporate profit growth remains the fuel for equity prices. S&P 500 earnings are expected to rise by 13.3 per cent in 2025 and accelerate to 15.5 per cent in 2026, reflecting expectations of continued economic expansion. Our investment philosophy centers on controlling what we can: investing in financially strong, industry-leading companies trading at reasonable valuations across diverse sectors. Market-moving news, fast: Get the BNN Bloomberg App now Sign up for the Market Call Top Picks newsletter at bnnbloomberg.ca/subscribe TOP PICKS: Microsoft (MSFT NASD) Microsoft is a global technology company providing a wide range of software services and products including Windows, Office 365, LinkedIn, and Azure cloud computing as well as owning a leading gaming platform, Xbox, and video game publisher, Activision Blizzard. Its business segments include Productivity & Business Tools, Intelligent Cloud and More Personal Computing. Its growing recurring revenue stream and strong balance sheet are appealing investment attributes. Microsoft’s dividend yield is 0.8 per cent. Visa (V NYSE) Visa is a global payments technology company, operating the world’s largest retail electronic payments network and providing financial institutions with a broad range of platforms for consumer credit, debit, and prepaid payments. Visa benefits from the secular shift from cash/cheque to card-based and electronic digital payments. Visa is also a natural beneficiary in the growth of e-commerce/online retail spend. Visa offers a dividend yield of 0.8 per cent. Fortis (FTS TSX) Fortis is a North American electric and gas utility company, generating its cash flow from regulated assets with over half its revenues from the United States. Fortis is a stable cash flow generator, with highly visible and defensive cash flows from operations. Supported by a backlog of low risk, regulated projects and cleaner energy initiatives, Fortis affirms an average annual dividend growth rate of four per cent to six per cent through 2030. Fortis has increased its dividend for 52 consecutive years and provides a dividend yield of 3.5 per cent. DISCLOSUREPERSONALFAMILYPORTFOLIO/FUNDMSFT NASDYYYV NYSEYYYFTS TSXYYY PAST PICKS: DEC. 16, 2024 Alphabet (GOOGL NASD) Then: US$196.66 Now: US$330.00 Return: 68% Total Return: 68% Chubb Limited (CB NYSE) Then: US$275.72 Now: US$300.77 Return: 9% Total Return: 10% WSP Global (WSP TSX) Then: $248.53 Now: $271.90 Return: 9% Total Return: 10% Total Return Average: 29%