Investment ideas from Garey Aitken of Franklin Templeton
Pro Picks: 3 Canadian Ideas from an $8 Billion Fund Manager
WATCH HERE: Canadian stocks are quietly outperforming U.S. equities—but is this a short-term anomaly or the start of a long-term trend? In this episode of In the Money with Amber Kanwar, Garey Aitken of Franklin Templeton explains why Canadian markets are holding their ground, how he’s navigating political volatility and tariffs, and which stocks he’s doubling down on.
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Canadian Natural Resources (CNQ) – The Oil King at a Discount
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Trading around $40, CNQ is Canada’s largest oil and gas producer, and Aitken sees its recent weakness as a golden buying opportunity. Despite the market’s cold shoulder, this energy stalwart is poised for a comeback.
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Blue-Chip Resilience: CNQ boasts 25 years of dividend growth in a cyclical industry, backed by exceptional management led by Murray Edwards with significant ownership alignment.
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Low-Cost Survivor: As a low-cost producer, CNQ generates cash flow even at depressed oil prices, ensuring it weathers the storm better than peers.
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Tariff-Induced Opportunity: Recent weakness, partly due to tariff concerns, has created an attractive entry point for contrarian investors.
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Dividend Appeal: Offers a near-6% yield with room for dividend growth and share buybacks, making it a cash flow machine.
Upside Potential: Aitken estimates a fair value of $50–$60 per share, implying 25–50% upside, depending on oil prices stabilizing around $70 per barrel.
2. Canadian National Railway (CNR) – The Rail Giant Ready to Rebound
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CNR, trading at its lowest since 2021, is a world-class operator that’s been unfairly punished, according to Aitken. This rail titan, held since its 1995 IPO, is set for a smoother ride in 2025.
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Proven Track Record: A blue-chip name with a stellar history, CNR is a cornerstone of North American logistics, moving goods across Canada and the U.S.
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Undervalued Opportunity: The stock’s pullback, driven by 2024 operational stumbles and tariff fears, has compressed its P/E multiple, creating a bargain for patient investors.
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Tariff Resilience: While tariffs may dent freight volumes (a second-order impact), CNR’s solid cost structure and defensive nature ensure staying power.
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Growth Setup: Aitken expects a stronger 2025 as operational issues fade, positioning CNR for a return to historical valuation multiples.
Upside Potential: Normalizing earnings by 2026–2027, Aitken sees 20–40% upside, potentially hitting historical multiples of 20x or more.
3. Fortis (FTS) – The Utility Star Shining Bright
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At a recent all-time high, Fortis (FTS) is the defensive darling in Aitken’s portfolio. While he’s trimming it slightly, this utility giant remains a rock-solid holding for stability seekers.
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Defensive Strength: Fortis owns crown-jewel regulated utilities in the U.S. Midwest and Arizona, delivering consistent earnings in any market environment.
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Dividend Reliability: A stellar track record of dividend growth makes FTS a favorite for income-focused investors looking for safety.
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Tariff Immunity: Unlike CNQ and CNR, Fortis is largely insulated from tariff risks, thriving in volatile markets as a safe haven.
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Strategic Positioning: Aitken’s overweight in utilities, including FTS, has paid off, but he’s selling at the margin to fund opportunities in beaten-down names like CNQ and CNR.
Upside Potential: While not explicitly quantified, Aitken notes Fortis’s valuation is stretched, suggesting limited near-term upside but strong long-term stability and dividend growth.
