Here we go again. Or with respect to our stock portfolios and net worth perhaps the right framing is ‘here we grow again’. And once again, it is tech stocks driving the market in the U.S. While a stellar earnings report from Shopify gave the Canadian markets a jolt. Shopify is once again the most valuable publicly-traded company in Canada. It plays ‘trading places’ with RBC for the most part. That means that Shopify has the potential to drive market returns more than any other stock. And while tech is underrepresented in the TSX Composite, investors can fix the index’s poor sector concentration by adding a sector ETF or a few select stocks from the index. Tech stocks lift markets on the Sunday Reads.
Just as a retiree might overweight to the defensive sectors, an accumulator who wants to add a growth kicker might look to the Canadian tech sector XIT-T. It’s smaller in numbers but a might force historically. Canada has a thriving tech sector and community.
Retirement Club – for DIY Canadian retirees
With the recent move, the tech sector is now 10.9% of the TSX Composite XIC-T. That said, as we can see from this 2020 post on Cut The Crap Investing – The Canadian tech sector roars the weighting has remained mostly steady.
In the post I offered …
It’s certainly a shame that the sector is underrepresented in the main indices. That said, an investor can shade to tech by way of a sector ETF. For those who hold individual stocks, they can skim a few from the top holdings. And it’s certainly wonderful news that the Canadian tech sector continues to grow and shine.
Shopify earnings
Here’s a good summary of Shopify’s earnings, with commentary on CNBC. From that link … “Shopify shares soared 21% on Wednesday after the company topped analysts’ estimates for the second quarter, and gave rosy guidance for the third quarter.
Here’s how the company did, compared with estimates from analysts polled by LSEG:
- Earnings per share: 35 cents adjusted vs. 29 cents
- Revenue: $2.68 billion vs. $2.55 billion
Second-quarter sales surged 31% year over year to $2.68 billion, an acceleration from a year ago, when revenue expanded roughly 20%.
The Canadian e-commerce company also offered third-quarter guidance that surpassed expectations. Shopify said it expects revenue to grow at a “mid-to-high twenties percentage rate” year over year, which is higher than the 21.7% growth projected by analysts, according to StreetAccount.”
More Canadian technology stocks
Constellation software CSU-T also reported earnings this past week. Constellation Software Inc. came out with quarterly earnings of $24.31 per share, beating the Zacks Consensus Estimate of $18.71 per share. This compares to earnings of $22.66 per share a year ago. These figures are adjusted for non-recurring items.
This quarterly report represents an earnings surprise of +29.93%. A quarter ago, it was expected that this company would post earnings of $20.48 per share when it actually produced earnings of $20.43, delivering a surprise of -0.24%.
Over the last 5 years CSU is up over 200%, greatly beating the TSX.
When Celestica reported earnings in late July, the company blew past forecasts on IA demand. The Toronto-based global manufacturing giant generated US$2.89-billion of revenue in the quarter ended June 30, up 21 per cent from the same period a year earlier. It also reported adjusted earnings of US$1.39 a share, up 54 per cent, and net earnings of US$1.82 a share, up 128 per cent.
The stock is up an astounding 323% over the last year. The return over the last 5 years is even more ridiculous. It is the big 3 that drives Canada’s tech index, and certainly that concentration offers some risk.
My homemade Apple dividends
Here’s why I have little trouble holding Apple and its one billion faithful users who continually deliver the free cash flow. That cash flow is largely used to buy back shares, increasing our ownership of the company, while also increasing earnings per share.
I have trimmed Apple in the past few years, making homemade dividends. Remember, there is no difference between a share sale and a dividend, except for tax purposes in taxable accounts. Given the markets ongoing run to new highs, I pondered on Twitter / X …
I have a few limit sale orders in place. We can even ladder those sales on an individual stock or ETF – think of it as reverse dollar cost averaging. It’s laddered income creation. We’ll sell at $40, $45, $50, $55? How much income does the market want to give me? Steve Miller would say, or sing – Take the money and run.
Revenue drivers in the U.S.
And more from Charlie on U.S. tech revenue growth …
Ten stocks lift the S&P 500
From Seeking Alpha. Just 10 big stocks encompass about 80% of the S&P 500 (SP500) since Liberation Day. We can consider this the current rally.
Those include the Magnificent 7 stocks, plus Broadcom (AVGO), Oracle (ORCL), and Palantir (PLTR), according to BofA Securities.
- Palantir (PLTR) – Opened 82.40 on April 2, up 127.4%.
- Broadcom (AVGO) – Opened 166.08 on April 2, up 84%.
- Oracle (ORCL) – Opened 139.86 on April 2, up 78%.
- Nvidia (NVDA) – Opened 107.29 on April 2, up 70.5%.
- Microsoft (MSFT) – Opened 377.97 on April 2, up 37.8%.
- Meta Platforms (META) – Opened 574.91 on April 2, up 33.1%.
- Tesla (TSLA) – Opened 254.60 on April 2, up 30.9%
- Alphabet (GOOGL) – Opened 155.15 on April 2, up 30.4% since then.
- Amazon (AMZN) – Opened 187.66 on April 2, up 19%.
- Apple (AAPL) – Opened 221.32 on April 2, up 1.2%.
The S&P 500 (SP500) opened 5,580.76 on Liberation Day, and to date it has advanced 14.3%.
Another good valuation reminder
It’s good news that real earning are driving performance of the top stocks in the U.S. market. But we can’t forget the concentration risk and valuation “issue”.
The Shiller PE ratio currently sits at 38.5.
Also we should not forget the lost decade for U.S. stocks.
Last week we were looking for U.S. equity ETFs on the Sunday Reads. I offered a couple of suggestions for those looking to shade in a U.S. value play, to potentially side step any value-inspired market correction.
You can also look to pure value plays such as iShares’ IVE or Vanguard’s VTV.
One stock that might help the cause is Berkshire Hathaway BRK.B. The stock is some 40% of my wife’s Spousal RRSP. That is more of a U.S. balanced growth fund than a ‘regular’ stock.
For a complete list of U.S. equity Canadian listed ETFs you can look to the ETF screener from ETF Market Canada.
Calling on iShares XGRO
Another simple move is to look at the asset allocation ETFs. iShares XGRO, a global balanced growth model moves your exposure to U.S. tech to about 10%, giving you less than 1% in the top ten stocks in the S&P 500. XGRO’s target is 80% equities and 20% bonds.
That might be a nice option for those who are in the retirement risk zone and looking to derisk, while maintaining very good growth exposure.
More Sunday Reads
At Findependence Hub – what Trump’s big tax bill might mean for Canadians. And for U.S. readers, the top 401k mistakes beginners make.
The Retirement Manifesto also takes a look at the recent tax implications south of the border.
Bob tells us what’s in store for the future of Tawcan as Bob and family get closer to the retirement stage.
Dividend Hawk had a busy week with many of his companies reporting. Including …
Manulife Financial Corporation (MFC) Reports second Quarter 2025 Results; MFC reported core earnings of C$0.95 per share for Q2 2025, a 2% increase from C$0.91 in the same period last year, though slightly below the consensus estimate of C$0.96. Global Wealth and Asset Management net inflows improved to C$0.9 billion, up from C$0.5 billion in Q1 and C$0.1 billion in Q2 2024. Book value per common share rose to C$24.90 as of June 30, 2025, compared to C$23.71 a year earlier.
Power Corporation of Canada (TSE:POW) Reports Second Quarter 2025 Financial Results; POW reported adjusted earnings of C$1.38 per share for the quarter ended June 30, up from C$1.17 in the same period last year and beating the analyst consensus of C$1.29. Revenue increased 26.2% year-over-year to C$9.23 billion. Book value per share rose slightly to C$35.90 as of June 30, 2025, compared to C$35.56 at the end of 2024.
At Banker on Wheels they’re adding alternatives to the 60/40 balanced portfolio. You’ll be able to cycle through another robust mix of posts and podcasts.
Stocktrades is a very good resource for Canadians looking for those Canadian growth kickers.
From Booming Encore, another inspiring retirement story in their Living Your Best Encore series.
GenYMoney offers her July portfolio update.
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