This TSX top gainer’s 25% leap prompts TD analyst to predict ‘upward financial revisions’ this year

How to play Canada’s Big Six banks with earnings around the corner, Veritas’s dividend growth stock picks and more in The Week in Stocks.

Stock of the week: Magna International Inc.

Magna International Inc.

(MG:TSX) was the top gainer on the S&P/TSX composite index with shares rising 24.5 per cent after the auto parts manufacturer reported surprise earnings that beat expectations on Friday. This prompted TD Cowen analyst Brian Morrison to hike his price target for the Aurora, Ont.-based company to $102.03 from $79.30. Shares of Magna closed Friday at $93.52. Morrison attributed the earnings beat to operating margins that topped forecasts. Magna also said it benefited from the recovery of tariffs and beneficial currency rates. The company is forecasting 2026 performance above the current consensus outlook, including quarterly free cash flow, with Morrison predicting Magna will undertake “material” share buybacks this year. “This should support upward financial revisions,” he said. The average 12-month price target for Magna based on the estimates of 16 analysts is $77.11, according to Bloomberg.

Keeping score

TD’s Big Bank top picks and a caution before earnings are out

Canada’s

Big Banks

will round out earnings season when they report fourth-quarter results at the end of this month. Last year, the Big Six took the stock market by storm, outperforming their U.S. mega-bank peers and domestic life insurers despite a weaker outlook for the Canadian economy and a looming trade pact review. In a note on Feb. 9, analysts at TD Cowen led by Mario Mendonca struck a note of caution regarding the Big Six, arguing that “stock valuations appear stretched on virtually every metric we look at.” The TD team found that the group is trading at an 18 per cent premium and “approaching full value territory.” The stocks are also trading at a one-year forward earnings per share of 14.3 times based on 2026 consensus, well above the 25-year trend of 10 to 12 times, TD said, and the equity risk premium (ERP) is currently sitting at a level last seen during the great financial crisis. Despite valuations that look stretched to TD, the analysts still think “strong fundamentals should support the sector in the near term” including net interest income, improving U.S. loan growth, and strong trading revenue. TD hiked its price targets for four of five of the Big Six. It doesn’t cover its own shares.

Bank of Montreal

‘s (BMO:TSX) target rose from $219 to $209,

Bank of Nova Scotia

(BNS:TSX) rose to $112 from $104,

Canadian Imperial Bank of Commerce

(CM:TSX) rose from $134 to $142,

National Bank of Canada

was cut to $175 from $181 and

Royal Bank of Canada

(RY:TSX) rose from to $260 from $246. TD’s top bank picks are BMO and RBC for their extensive U.S. capital markets operations. BMO closed at $92.17, Scotiabank at $103.16, CIBC at $130. 51, National Bank at $174.78 and RBC at $230.98.

Veritas picks for likely dividend growth companies

There is no shortage of macroeconomic uncertainty in 2026. It’s through this lens that Veritas Investment Research recently updated its twice yearly report on companies it thinks can deliver reliable dividend growth. For 2026, Veritas is favouring organizations with “reasonable balance sheets, manageable payout ratios and solid capital deployment strategies” that will allow them to navigate any economic shocks. To qualify for inclusion on Veritas’s list of stocks, shares need to be rated a buy and yield a dividend of three per cent, with some exceptions. “We favour names with long histories of dividend growth, such as grocers, or names that emphasize total shareholder returns (dividends + buybacks),” Veritas said. Here are a few examples of preferred dividend stocks by sector.

Communication services:

Veritas likes

Quebecor Inc.

(QBR/B:TSX), which it expects will increase its dividend, currently 2.9 per cent, by five to 10 per cent this year

.
Banks:

Royal Bank of Canada (RY:TSX) is among the recommended Big Bank picks that offers “the highest potential of high single-digit to low double-digit dividend growth within our coverage.”

Pipelines:
Enbrige Inc.

(EN:TSX) has a dividend yield of 5.9 per cent, a dividend growth outlook of four per cent and is among Veritas’s top picks, given its business is supported by “risk-reducing regulation.”

Utilities:

Veritas recommended Fortis Inc. (FTS:TSX) for its “reliable” 3.5 per cent yield and an approximately five per cent dividend growth outlook.

Telus Corp.

(T:TSX) was named as a company to be “cautious about” due to an elevated payout ratio in relation to its 8.9 per cent yield.

Price target hikes

• RBC Capital Markets analyst Irene Nattel boosted her price target for Saputo Inc. (SAP:T) to $50 from $47 on better than expected earnings. Shares closed Friday at $42.38.
• CIBC Capital Markets analyst Stephanie Price hiked her price target for Calian Group Ltd. (CGY:TSX) to $76 from $65 after its defence and space segment rose 10 per cent in the first quarter. Shares closed Friday at $70.60.
• BMO Capital Markets analyst Jeremy McCrea hiked his price target PrairieSky Royalty Ltd. (PSK:TSX) to $34 from $32 on another “strong quarter” as the company appears to be “defying the trend” of slower oil and gas activity in North America. Shares closed Friday at $29.82.
• Raymond James Ltd. analysts Michael Barth and Luke Konschuh hiked their price target for Precision Drilling Corp. (PD:TSX) to $143 from $131 on a bet the company could buy back as much as eight per cent of outstanding shares in 2026. Shares closed Friday at $119.04.
• RBC Capital Markets analyst Andrew Wong hiked his price target for Cameco Corp. (CCO:TSX) to $160 from $150 on increasing momentum in nuclear plant construction. Shares closed Friday at $153.94.
• TD Cowen analyst Vince Valentini hiked his price target for BCE Inc. to $40 from $38 following presentations by CEO Mirko Bibic. Shares closed Friday at $35.01.

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• Email: gmvsuhanic@postmedia.com