In 2026, the stock market is looking… confusing.
On the one hand, many of the world’s biggest companies appear to be pricey, with big tech stocks trading at 35-plus times earnings on average.
On the other hand, the AI revolution is genuinely creating a lot of value, with new revenue streams and investment opportunities coming seemingly out of nowhere.
How are investors to decide what to do here?
In my view, they should do so by focusing on overlooked parts of the market. If you look at things like hard assets, which are comparatively neglected right now, you can see a lot of hidden value. There are opportunities here that a person would be justified in having a lot of conviction in. In this article, I’ll explore my highest-conviction Canadian stock, a financial conglomerate that is well known for investing in hard assets.
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Brookfield
Brookfield Corp (TSX:BN) is a Canadian financial conglomerate best known for its alternative asset management activities. The company operates several well-known subsidiaries such as Brookfield Renewable Partners (TSX:BEPC)(TSX:BEP.UN) and Brookfield Infrastructure Partners (TSX:BIPC)(TSX:BIP.UN) that are building some of the world’s most important infrastructure.
Exposure to everything in the Brookfield ecosystem
The “Brookfield ecosystem” is an interconnected network of companies either wholly or partially owned by Brookfield. The ecosystem consists of four main businesses, along with some peripheral ones. The four I’m referring to are:
- Brookfield Asset Management (TSX:BAM). An ultra-high margin, asset-light asset manager that practically prints profit each and every year.
- Brookfield Renewable Partners. A renewable energy company that supplies power to some of the world’s biggest utilities, as well as tech companies that are investing in AI data centres.
- Brookfield Infrastructure Partners. An infrastructure company that is buying up pipelines, toll roads, telecom towers and data centres around the world.
- Brookfield Wealth Solutions. An insurance business that is largely involved in re-insurance.
These four pillars of Brookfield’s ecosystem all have a lot of promise. Looking at what they have going for them, it can feel tempting to buy one of them and stick with it for life. However, you can get exposure to all four, and then some, with Brookfield stock. For my money, that’s the best way to play it.
A modest valuation
One attractive feature of Brookfield stock right now is a comparatively cheap price tag. The stock trades at about 20 times distributable earnings (DE). DE is an alternative measure of earnings used specifically by asset managers. 20 times DE is a lower “PE ratio” than that of the TSX, indicating undervaluation. Also, Brookfield Corp’s market cap is less than the value of all of its assets (taken at market values), minus the value of the company’s corporate-level debt. This too indicates undervaluation. On the basis of valuation, then, Brookfield looks attractive.
Strong future prospects
Finally, Brookfield Corp appears to have strong future prospects. The company has an elite leadership team consisting of high-profile executives Bruce Flatt and Conor Teskey, who have presided over a period of market-beating returns. Its board also has such distinguished members as Howard Marks. This much competence at one company points to the likelihood of the company performing well in the future. So, Brookfield is cheap today, and likely to deliver a lot of value tomorrow. It’s a win-win situation.
