It was certainly a wild week on the markets. The TSX managed to close the week relatively flat, but most US indexes took a bit of a hit. It wasn’t necessarily the decline that was so surprising, but instead the volatility of that decline.
We witnessed some of the biggest intraday moves in S&P 500 history on the day Nvidia reported earnings. In what was deemed a “market-saving” quarter by Nvidia, the markets launched in the morning and subsequently dumped in the afternoon on rumors that the US was going to keep policy rates steady.
Risk-on assets are getting hammered, hard. After a long, successful run in price, investors are finally starting to realize how important it is to be properly allocated to Bitcoin relative to risk tolerance. Or, just not own Bitcoin at all if they cannot handle the swings. We’re down around 30%~ since the start of October.
I’m seeing plenty of high-valuation, high-beta names trading 40%, 50%, even 60%+ off highs in a matter of a month or two. I’m also seeing commentary from retail investors that these stocks are “now on sale.”
Going from nosebleed valuation to sky-high valuation does not necessarily mean there is a sale.
I watched plenty of investors “buy the dip” on speculative investments in 2021 only for them to never recover. Although it feels impossible for this to occur because of the bull market we’ve had over the last 5~ years, it does happen.
This type of volatility is precisely why I had been laying out some potential defensive options that were trading at discounts for members to have a look at. Such as, the Value Call previously on Waste Connections. Lots of these high-quality names were sold off in order to flood into risk-on assets.
Although it’s fairly early, we’re starting to see a bit of a potential rotation out of those high-growth names and into quality, defensive compounders. In November alone, Waste Connections has outperformed the NASDAQ by 12%~.
Obviously market performance over a 3-week timespan is irrelevant. The point of the chart above is to more so touch on the potential rotation back into defensive names.
Earnings
Outside of my quarterly bank earnings overview, which will not be released until the banks report in December, this will be my last earnings overview of the quarter.
Overall, it was a soft quarter from the markets in terms of earnings. We’ve witnessed a lot of companies reduce guidance, warn of some economic headwinds, and generally produce subpar results relative to valuations.
This has led to some market volatility and thus more attractive prices. I’m going to be sifting through a lot of companies I’ve had on my shortlist for quite some time now to see if they make viable additions to the Bull Lists.
For now, let’s go over some companies that reported this week.
Exchange Income Corp (TSE:EIF)
I have a feeling this company is not highly owned here at Premium. The only reason I say this is because not a lot of people have asked questions about this one or discussed it much in the Discord.
However, the company has quietly been crushing it. Not only providing a rock-solid monthly dividend, but outsized total returns.
Interestingly enough, this company has outperformed the S&P 500 over the last 1, 3, 5, 7, and 10 year timeframes. It has truly been a remarkable company. If you’ll notice in the chart below, the company was tracking the market quite well, up until some exceptional earnings results have vaulted it higher.
Exchange Income Corp and record-breaking quarters have gone hand in hand for quite some time now. Revenue increased 35% to C$960 million, and adjusted EBITDA hit a new high at C$231 million, marking all-time records across every key financial metric, including earnings per share.
Keep in mind, this includes the share issuances the company has underwent to fund acquisitions.
The company also raised its annual dividend by 5%. However, this company is quickly shifting from an income-based play to a growth play. In fact, having “Income Corp” in its name isn’t doing the company justice right now.
The headline driver was the first full-quarter contribution from Canadian North, a transformative acquisition. Back in my oil and gas days, I was a frequent flier of Canadian North. If you wanted to get to Northern Alberta, you used them.
Management mentioned the acquisition should meet return thresholds by late 2026, with operating efficiencies and cost structure changes already underway.
EIC’s aircraft leasing arm, Regional One, is capitalizing on steady demand for turboprop planes and is now eyeing long-term expansion into the Boeing 737 parts market, positioning itself in another untapped market for growth.
When we look to the broader Aerospace and Aviation segment, load factors have recovered post-wildfire disruptions, and the essential air services and Medevac operations are benefitting from scope expansion and pricing strength due to the limited competition.
Intelligence, Surveillance & Reconnaissance (ISR) continues to be the sleeper within this company in terms of growth. The UK’s second aircraft is flying missions with positive feedback, while Canadian and Australian defense contracts remain high-stakes near-term growth verticals. Keep in mind as well, the company’s ISR department uses Canadian made parts and aircraft. At a time when sovereignty is under the microscope, this is pretty key.
The company also continues to excel when it comes to composite matting. Its Spartan division is effectively sold out through 2026, which has forced the company (in a good way) to spend $60 million on a second U.S. plant to triple capacity. Demand is being driven by grid infrastructure upgrades, data center expansion, and T&D sector buildouts.
The one soft spot remains the Multi-Storey Window Solutions business, which continues to face project deferrals, tariff headwinds, and developer caution. The company reiterated that long-term housing demand remains intact, and once development confidence returns, this segment could regain popularity quickly.
EIC guided to 2026 adjusted EBITDA of $825–875 million. This would be a 14% increase at the midpoint. It also stressed that this forecast excludes any new acquisitions, material contract wins, or growth CapEx beyond existing commitments. With over C$1.2 billion in available liquidity and leverage near all-time lows, the balance sheet is in great shape to continue acquiring.
Management is setting the stage for another leg up in terms of compounding growth. Investors who can look through short-term noise and focus on execution against a rich backlog of growth drivers will be well-positioned heading into 2026.
Home Depot (HD)
Home Depot’s third-quarter results show a business executing well but grappling with macro pressures that continue to weigh on the home improvement market. So much so that the company had to revamp their overall outlook.
I will admit, I had expected the thesis (a rebound in home improvement activity) to come to fruition by now, but I am still being patient.
Net sales rose 2.8% to $41.4 billion, with comparable sales just barely positive at 0.2%.
Earnings came in at $3.74, down slightly year-over-year, and as mentioned the company cut its full-year outlook once again, now expecting earnings to decline around 5% relatively to 2024.
Management was upfront that Q3 results were sub par. The reasoning? An unusually calm storm season, which directly hit sales in high-margin repair and replacement categories. Think roofing, power generators, etc. Historically, storm damage has been a reliable, yet unpredictable, tailwind for Home Depot’s repair-driven sales. With virtually no storm activity this year, that natural demand catalyst disappeared. However, I highly doubt this is permanent.
Housing turnover remains historically low. Homeowners simply aren’t moving, and when they do, they’re less inclined to renovate. I think this is not only an element of economic uncertainty, but also one where a lot of homeowners in the states do not want to give up their pandemic level mortgages. Remember, in the US, you lock your rate in over a 30 year timeframe.
Home Depot now expects full-year sales growth of 3%, driven in large part by acquisitions. Same store sales are expected to be “slightly positive,” a downgrade from prior expectations of 1%+ growth. Operating margins are forecast at 13%, with earnings down 5% year-over-year, as mentioned previously. What I took from management’s tone was this:
They don’t see a catalyst for stronger demand next quarter, and they are forecasting more housing uncertainty in the future. The turnaround is going to take longer than expected.
What does this all mean for long-term shareholders? That Home Depot will continue to lean heavily into long-term investments in the business on the expectation things will turn around. However, without near-term macro support, those investments will weigh on margins. To sum it up in a single sentence? You need to be patient.
The bull case here is still intact. Home Depot is building a more durable, omnichannel, pro-oriented platform. But the economy isn’t cooperating, and investors shouldn’t expect the payoff to come in fiscal 2025. If mortgage rates ease, home turnover picks up, and pro backlogs start to rebuild, Home Depot will be positioned to do well Until then, the stock is likely to remain in a holding pattern, with investors needing to be patient as the cycle plays out.
My thesis is not broken, but I would say it is certainly stalled. Inventory is high, margins are under pressure, and the near-term sales outlook is not great. But the company is gaining share, improving execution, and putting the right steps in place to benefit when the environment does turn around. Investors willing to wait through another quarter or two of sluggish demand may be rewarded when the cycle turns.
Loblaw (TSE:L)
As soon as you think the torrent run from Loblaw is close to ending, it continues to put up rock-solid results. So much so that management increased full-year earnings guidance, now expecting low double-digit growth. On the quarter, revenue increased 4.6% and earnings increased 12%.
If you look to the earnings chart below, it is truly impressive how a slow growing grocer can put this type of growth up.
How has this company continued to grow earnings by double digits while revenue grows in the low single digits? Primarily through re-investing cash flow back into the business to improve the margin profile along with a record amount of share buybacks. Over the course of 2025, the company has already purchased $1.3B worth of shares. Over the last 10 years, the company has eliminated nearly 30% of its total shares.
In food retail, total sales rose 4.8% while same-store growth was lower at 2.0%. I’m not overly worried about this. It is a nice mix of new stores driving growth along with existing. The Company opened 76 stores over the past year, increasing retail square footage by 2%, with a clear target on small-format No Frills and Maxi locations.
This is the bulk of the thesis with Loblaw. It has the largest discount presence in the country, and during a time when Canadians are struggling to afford basic necessities, groceries is one of the first things they look to save money on.
The pharmacy segment remains a clear bright spot, with same-store sales up 4% and prescriptions driving the majority of that growth.
Shoppers Drug Mart continues to benefit from growing convenience and omnichannel reach. Sure, people are not shopping there for full scale groceries. However, one can easily pick up a few items on the way to grab their prescriptions. In addition to this, they’ve partnered with Uber Eats for delivery.
E-commerce sales rose 18% year over year. The key thing here is it is not just food driving the growth. The company’s pharmacy segment is seeing a lot of online activity as well. Meanwhile, new growth avenues like the retail media and freight-as-a-service are picking up steam. Management expects over $300 million in EBIT from these two businesses alone in 2026, providing new high-margin streams and diversification away from solely being a grocery store.
Margins expanded, with gross profit improving 20 basis points. Loblaw continues to push back against vendor cost increases. This is a very important element of Loblaw.
The company’s reach and scale is so large, inclusions in store are a must for many companies. So it can flex this scale to get discounts on products. If you’ll remember, back in mid 2025 Folgers raised their prices on coffee. Once they wouldn’t work with Loblaw on reducing them, the grocer simply took their product off the shelves.
Loblaw remains the best-in-class defensive compounder in arguably the safest sector on the TSX.
