Premium content from Motley Fool Stock Advisor Canada
Dear fellow Fools,
The third quarter of 2025 is in the books, and largely, North American stock markets have provided more fun than not this calendar year —especially for those who didn’t run for the hills in the opening months. Tariff uncertainty caused a bumpy beginning, but as is so often the case, the market has shrugged off the concern that existed.
To provide perspective on the existing market environment, Motley Fool CEO and co-founder, Tom Gardner, has taken to providing a quarterly update. Highlights from the most recent edition follow:
- AVOID SPECULATION IN HIGH VALUATION MARKETS: Investors should avoid speculative behaviour — like options trading, leveraged margin, buying low-priced stocks under $10, and aggressive bets — especially after markets have had a rapid run-up, such as the S&P 500 being up 35% since mid-April. This is the time to reduce risk, not increase it.
- UNDERSTAND MARKET EUPHORIA AND HISTORICAL CONTEXT: Current market valuations are at or near historic peaks, with the S&P 500 over 25 times earnings and NASDAQ companies at 6.5 times sales — levels rarely seen in the last 25 years. History shows these periods often precede heightened volatility and lower future returns, so long-term investors should take heed.
- MATCH PORTFOLIO RISK TO LIFE CIRCUMSTANCES: Investors should align their investing stance — cautious, moderate, or aggressive — with their financial situation, including income stability, time horizon, and emotional tolerance for losses. Those with shorter horizons, income uncertainty, or unease about drawdowns should lean towards more cautious investments.
- SHIFT TOWARD LOWER RISK AS VALUATIONS RISE: Regardless of current risk profile, individual long-term investors are advised to move one step lower on the risk spectrum given today’s high market valuations — so aggressive investors move to moderate, moderate to cautious, etc. — to better manage downside risk if markets decline.
- PRESERVE EQUITY EXPOSURE AND FOCUS ON QUALITY: Though equities remain the best long-term asset class, investors should avoid heavy speculative moves and instead focus on companies with strong balance sheets and business stability, maintaining a list of high-quality companies to buy during market volatility.
Now, while that may read as somewhat of a “warning,” I might add that one of the takeaways should be that the investing journey is filled with nuance. In addition, it’s a highly … HIGHLY … personal pursuit. No two life circumstances are the same, and what works for some does not necessarily work for others.
Furthermore, the overlay to Tom’s points that must be kept front and centre at all times is that over the long term, investing in high-quality businesses, ideally at attractive valuations, is a proven route to investing success. Full stop.
Ebbs and flows, though, are inevitable. But just as we’ve seen in 2025, being caught off guard or shaken by an ebb or a flow can be hugely detrimental to one’s financial health.
To be sure, Tom’s somewhat cautionary tone is warranted. But caution is always warranted when it comes to investing. After all, nobody has a crystal ball.
It’s with this cautionary tone in mind, though, that we bring you five durable businesses that we believe are ripe to buy right now — all of which are well-suited for whatever the markets throw our collective way.
Foolishly yours,
Iain Butler
Advisor, Stock Advisor Canada
“Best Buys Now” Pick #1:
Brookfield Infrastructure Partners (TSX:BIP.UN)
Most of my days are spent in the home office, cruising for information and pecking away at the keyboard. A recent Thursday was not one of those days.
What began with evening plans to take in the Blue Jays/Red Sox live quickly morphed into much more when I learned that Brookfield was hosting its Toronto investor day that same afternoon. So, a full day in Toronto, it was. I even rode the subway for the first time in years!
The overarching message from the Brookfield event is that the empire is very well positioned to be a massive winner if the projected buildout of AI-related infrastructure comes even close to what’s currently forecasted.
We’ll highlight Brookfield Infrastructure Partners (TSX:BIP.UN) here, but as a bonus of sorts, a similar story can be told for Brookfield Renewables (TSX: BEP.UN). The same goes for Brookfield Corporation (TSX: BN), which provides exposure to both.
There’s much more to this situation than just AI, but as it pertains to that theme specifically, BIP is very well-positioned as a go-to beneficiary of the unprecedented amount of capital that’s to be hurled towards the digitalization trend. A trend that BIP, and other Brookfield affiliates, have been riding since the last time I attended one of these investor days live several years ago.
While the hyperscalers have the capital, they don’t have the wherewithal to actually build out the physical footprint. BIP is one of the few — on the planet — that does have the wherewithal. Currently, the company has seven “AI Factories” under development, which include six gigawatts of compute capacity and $200 billion in expected capital deployment. Figures that have room to grow, in the near term, let alone the decades to come.
We hear about NVIDIA (NASDAQ: NVDA). We hear about Oracle (NYSE: ORCL). And so on. We don’t hear as much, though, about the picks-and-shovels contributors to the AI theme. Yet, as anyone with a working knowledge of the California gold rush knows, that’s where the money tends to be made in these situations. BIP and BEP offer that pick-and-shovel exposure to a secular theme still in the very early innings.
