Kyle Prevost, editor of Million Dollar Journey and founder of the Canadian Financial Summit, summarizes recent financial headlines and provides context for Canadian investors.
U.S. earnings remain strong
While many analysts expect corporate profits in North America to slow sometime over the next year, current quarterly results still show resilience. Below are highlights from a few large companies that set the tone for the latest reporting season. (All figures are in U.S. dollars unless noted otherwise.)
PepsiCo (PEP) started the season with a notable outperformance. The company reported earnings per share of $1.97 versus estimates of $1.84, and revenue of $21.97 billion versus $20.84 billion expected. The results and management commentary pushed the stock higher on the day of the release.
Delta Air Lines (DAL) reported results close to expectations: $1.51 per share versus a $1.53 estimate and revenue of $12.84 billion versus a $12.87 billion forecast. Management cited strong international demand—particularly to Europe—which, combined with a stronger U.S. dollar against the euro and pound, has supported profitability. Delta expects to restore pre-pandemic flying capacity by next summer, and its shares rose after the report.
BlackRock (BLK), the world’s largest asset manager and often treated as an economic bellwether, posted solid earnings but signaled headwinds ahead. The company reported earnings per share of $9.55 versus $7.93 expected, yet year-over-year revenues fell 14.6%. Assets under management declined to about $8 trillion, below some analyst expectations, reflecting pressure from falling equity markets. Management offset concerns with more than $375 million in share buybacks, and the stock gained ground after the announcement.
Taiwan Semiconductor beats estimates but forecasts a cautious outlook
Taiwan Semiconductor Manufacturing Company (TSMC) is central to the global chip ecosystem. Listed on the Taiwan exchange under 2330 and trading in the U.S. as TSM, TSMC manufactures advanced semiconductors for many of the world’s largest technology firms, including Apple, Intel, Nvidia and Qualcomm.
TSMC dominates the most advanced process technologies and controls a significant share of contract chip production—estimates put that share at roughly 55%—which has translated into outsized strategic importance. The company’s position has earned it descriptions such as a “silicon shield,” reflecting how critical its manufacturing is to global technology supply chains and geopolitics.
With a market capitalization near $327 billion, TSMC ranks among the world’s largest companies and is a major holding in several exchange-traded funds, including a notable weight in emerging markets and Taiwan-focused ETFs. That exposure means many investors indirectly hold more TSMC than they may realize.
TSMC reported third-quarter net income of $8.81 billion on revenue of $20.23 billion, beating analyst estimates. Still, management trimmed capital spending by about 10% after flagging a softer near-term demand outlook tied to U.S.-China tensions and weaker sales to some major customers, including Apple. The combination of reduced guidance and geopolitical concerns has pressured the stock, which has experienced a significant year-to-date decline.
Although the pullback in the share price may look worrying given a strong quarterly profit increase, a potential benefit is that easing chip supply constraints could follow if the company’s forecasts prove correct—an important development for industries that rely on semiconductors.
Are you ready to triple your money in 10 years?
Optimism about long-term returns often spikes after deep market sell-offs. Chartered financial analyst Ben Carlson recently outlined data showing that recoveries following severe bear markets have historically produced strong gains. Given the S&P 500’s significant year-to-date decline, the historical record suggests a meaningful rebound is possible as market conditions normalize.
For perspective, investors who stayed invested through past deep market downturns often saw substantial recoveries. Holding through the nine bear markets over the past several decades would, on average, have produced roughly threefold returns over subsequent long-term horizons. That historical context doesn’t guarantee future results, but it does highlight the value of discipline and long-term focus.
Behavior matters: an investor’s emotional response to volatility often determines whether they capture future gains or miss them while waiting for a “perfect” recovery. Sticking to a plan, maintaining diversified allocations, and avoiding impulsive trades are repeatedly cited by advisers as key to benefiting from eventual market rebounds.
As good as U.S. returns might be, could Canadian stocks outperform?
Valuation differences between Canadian and U.S. equities have led some strategists to project better returns from the S&P/TSX Composite over the next decade. Analysts from Bank of America have argued that a combination of Canada’s commodity exposure, relatively higher dividend yields, and a balance-sheet profile concentrated in cash-rich sectors could support stronger returns for Canadian equities.
Some factors cited in favor of Canadian outperformance include:
- Greater sensitivity of the TSX to commodity price recoveries.
- Higher average dividend yields that may make Canadian stocks more attractive in a rising-rate environment.
- A corporate landscape that includes many cash-heavy companies, contrasting with highly leveraged U.S. technology firms.
- Perceived undervaluation among major Canadian banks.
- Advantages from global food security concerns given Canada’s role in agriculture and resources.
- Potential benefits from shifting supply chains and nearshoring that favor close U.S.-Canada trade links.
Bank of America strategists have offered specific forward-looking estimates that see the TSX delivering mid-single-digit annual price growth plus dividend yields over the coming decade, while projecting more modest combined returns for the S&P 500. A stronger U.S. dollar could further boost revenues for Canadian exporters selling to U.S. customers.
That said, historical performance has often favored U.S. equities, and many investors—including the author—prefer a broadly diversified portfolio that captures opportunities in multiple markets rather than betting heavily on a single outcome.
Kyle Prevost is a financial educator, author and speaker. When he’s not coaching on a basketball court or sparring in a boxing ring, he helps Canadians with their finances at MillionDollarJourney.com and through the Canadian Financial Summit.