BMO's Game-Changer Picks in Energy Infrastructure

In the latest insights from BMO Capital Markets, analyst Ben Pham has unveiled his top picks in the lucrative energy infrastructure sector. With an optimistic look towards 2027 and beyond, Pham's recommendations come as target prices for most Canadian energy infrastructure stocks are set to rise, thanks to exciting new growth projects and improved financial stability.

"We are updating our valuation base and introducing 2028 estimates, which are driving target price increases across our coverage," said Pham. He highlighted Keyera as the new top pick with an unchanged target price of $54. Following closely are Northland Power and TransAlta, representing significant opportunities for investors. This is a shift from the previous focus on a top five ranking, which included other prominent names.

Strong Growth Forecasts

Looking ahead, the forecast indicates robust year-over-year growth for power and utilities, with Northland Power projected to lead at a staggering 34% increase in free cash flow per share. Other key players like Algonquin and TransAlta are also expected to show impressive earnings growth, ensuring a vibrant landscape for long-term investors.

Analyzing the Rental Market Dynamics

Shifting gears, the rental market also shows notable trends. According to Scotiabank’s Mario Saric, August data reveals a significant uptick in domestic rents - the first rise of over 0.5% since March 2025. Two-bedroom rents saw a monthly increase of 0.7%, signaling a positive shift contrasted with previous declines in July.

With smaller regional markets outperforming major cities, there’s a bright spot for property investors. Cities like Edmonton and Calgary are leading the charge, while others like Ottawa and Vancouver are seeing a decline.

Canada's Labor Market Struggles

On another note, the Canadian job market is facing challenges as it experienced a loss of 66,000 jobs in August, exacerbating fears of a contracting economy. Senior economist Shelly Kaushik noted significant job losses in the manufacturing sector, heavily impacted by U.S. tariffs.

The ongoing trade uncertainties continue to pose a threat to sectors reliant on exports, suggesting that immediate recovery may be difficult without strategic negotiations with the U.S.

Conclusion: Bright and Gloomy Outlooks Combined