A well-diversified portfolio of stocks should include names in various sectors and geographies, with different underlying business models that provide portfolio protection in downturns and smooth out returns over the long haul. That’s the theory, anyway.
In that light, I think these two Canadian stocks could be primed for a big move in 2026. Here’s why I think these two Canadian stocks look like solid value opportunities relative to their sectors (and the broader markets), and why they look compelling today.
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Canadian National Railway
Canadian National Railway (TSX: CNR) is the total return giant I think most investors are looking for. Indeed, this company has quietly compounded shareholder wealth for decades, powered by an irreplaceable North American network and disciplined cost control. As supply chains normalize and North American industrial activity gradually improves into 2026, CN Rail stands to benefit from rising volumes across intermodal, grain, energy, and automotive freight.
This company’s business model is built on high fixed costs and powerful operating leverage. Once trains are running and tracks are maintained, incremental carloads tend to fall heavily to the bottom line. That means even modest volume growth in 2026 could translate into outsized earnings growth.
That goes double for those who expect that CN’s management team will continue to push efficiency improvements and pricing discipline. Longer term, CN remains a beneficiary of onshoring and “friend‑shoring” trends, as manufacturers seek more reliable North American logistics corridors.
Manulife Financial
Another top stock I continue to tout as a value (and long-term total returns) play is Manulife Financial (TSX: MFC).
Indeed, Manulife has long been viewed as a steady, somewhat unexciting insurer, or one that’s good for income, and less so for growth. That perception is starting to shift, and 2026 could be the year the market fully re‑rates this global financial powerhouse. The company has been simplifying its portfolio, pivoting to higher‑return businesses like wealth and asset management, and leaning into its sizable presence in faster‑growing Asian markets.
Additionally, the insurer has continued to sell off its capital-intensive business units, focusing instead on its profit centers. As it does so, Manulife’s earnings mix has become cleaner and more predictable. Pair that with rising fee‑based revenue and a healthier balance sheet, and you have a business that can support stronger, more consistent dividend growth while buying back shares under a still‑modest multiple.
If interest rates drift lower but remain above the ultra‑low levels of the last decade, insurers like Manulife can enjoy better investment spreads without the same pressure on their guarantees. Add in demographic tailwinds for retirement and wealth solutions, and the setup for mid‑single‑digit to high‑single‑digit earnings growth looks compelling into 2026 and beyond.
