Despite recent volatility, Canadian equities have attracted strong buying in recent weeks, with the S&P/TSX Composite Index up 27% year to date. However, lingering concerns remain, including the impact of trade disruptions on global growth, ongoing geopolitical risks, stretched valuations after the recent rally, and the possibility of an artificial intelligence (AI) bubble. Given the current market volatility, a well-balanced portfolio of growth, defensive, and dividend plays can help investors achieve better risk-adjusted returns. With that approach, here are my three top picks.
Source: Getty Images
Celestica
Celestica (TSX:CLS) has been one of the best-performing Canadian stocks this year, delivering gains of more than 250%. Strong quarterly results, raised 2025 guidance, and an improving outlook have all contributed to its remarkable share price momentum. The accelerating adoption of artificial intelligence (AI) has also encouraged hyperscalers to invest heavily in expanding AI-ready data centres, driving demand for Celestica’s hardware and solutions.
The company is doubling down on innovation by developing advanced products, including next-generation switches and storage systems—initiatives that should strengthen its competitive position and support long-term growth. Celestica also stands to benefit from rising global defence spending amid heightened geopolitical tensions, which could meaningfully boost revenue from its Advanced Technology Solutions (ATS) segment. As a result, its growth runway appears robust. Management expects revenue and adjusted EPS to increase by 26.4% and 52% in 2025, and by 31.1% and 39% in 2026, respectively.
Although the recent surge in its share price has pushed its NTM (next-12-month) price-to-sales and price-to-earnings multiples to 2.6 and 43.6, I remain bullish on Celestica given its strong growth potential.
Dollarama
Dollarama (TSX:DOL), a leading discount retailer with 1,665 stores in Canada and 395 in Australia, is an excellent defensive bet. Thanks to its superior direct-sourcing model and efficient logistics network, the Montreal-based retailer offers a wide range of consumer goods at attractive price points, driving strong sales even in challenging economic conditions.
Dollarama continues to expand its store network and aims to reach 2,100 locations in Canada and 700 in Australia by fiscal 2034. With low capital intensity and high returns on investment for new stores, this expansion should meaningfully support both revenue and earnings growth. Additionally, Dollarcity’s contribution to Dollarama’s profitability is likely to increase over time, supported by Dollarcity’s aggressive growth plans and Dollarama’s option to boost its ownership stake from 60.1% to 70%.
Given its strong financial performance and compelling long-term growth outlook, I believe Dollarama remains an attractive buy at current levels.
SmartCentres REIT
SmartCentres REIT (TSX:SRU.UN) is an appealing dividend pick thanks to its strong cash flows, attractive yield, and solid growth outlook. The REIT owns 197 strategically located properties, with 90% of Canadians living within 10 kilometres of at least one location. Its high-quality tenant base—95% of tenants are national or regional brands, and 60% operate in essential service categories—helps the real estate investment trust maintain consistently strong occupancy, which stood at 98.6% in the third quarter.
SmartCentres continues to expand its portfolio, opening three self-storage facilities this year and bringing its total to 14. Additional facilities under development in Montreal and Laval are expected to open next year, while sites in Burnaby and Victoria are scheduled to open in 2027. Beyond these projects, the REIT has an impressive long-term development pipeline of 86.2 million square feet, which should meaningfully support future financial growth.
With these growth drivers in place and a compelling forward dividend yield of 7.34%, SmartCentres appears well positioned to maintain—and potentially grow—its dividend over time.
