Jerome Hass’s Top Picks for November 14, 2025
Published:
Jerome Hass, Portfolio Manager, Lightwater Partners
Focus: Canadian stocks
MARKET OUTLOOK:
The market has performed extraordinarily well in 2025.
Despite the tariff war, on-going inflation concerns, widening deficits, signs of slowing economic growth, and geopolitical tensions, the U.S. economy has continued to outperform expectations.
It has pushed the U.S. and Canadian stock markets to new highs. Valuations by almost all measures are at record levels. In short, a lot of good news has been priced into the market. Hence, we believe investors should be cautious in the months ahead, as the upside is limited.
Macroeconomic and political headwinds aside, there are always plenty of opportunities in the Canadian mid-cap space to put capital to work effectively. These companies tend to be under-followed and undervalued due to the absence of Canadian pension funds, Canadian institutional investors or retail brokerages allocating funds to this segment.
TOP PICKS:
Cineplex (CGX TSX)
The last decade has not been a happy time for Cineplex shareholders. The stock was a stock market darling from 2008 to 2015, arguably one of the most over-owned stocks among Canadian institutions and Investment Advisors.
The share price plateaued around $50 from 2015-2017 before descending to COVID pandemic induced lows. The knock-on Cineplex is that streaming services such as Netflix are eating cinema exhibitors’ lunch (or popcorn). We disagree but we are not going to debate the industry’s fundamentals nor Cineplex’s. Timing can be critical to investing and it’s time for Cineplex’s star to shine for investors. Here’s why: The longtime CEO of Cineplex, Ellis Jacob, announced his intention to retire at the end of 2026. Neither Ellis nor the board own a lot of Cineplex shares, but the CEO (and other senior managers) have change-of-control provisions in their contracts.
The CEO alone is estimated to earn $12 million if a sale is completed before his departure. Because Cineplex controls 73 per cent of the Canadian market, the Competition Bureau would have to approve any deal. Let’s assume that it takes six months. That means a deal would have to be announced before the end of June 2026.
There is an activist investor in Cineplex (Miami-based Windward) who values the company at $31. Lightwater has a $34 fair value. With a seven-month window to a potential deal, we like the risk / return of this stock. That’s why it is our largest position.
Rockpoint Gas Storage (RGSI TSX)
We do not invest in Initial Public Offerings (IPOs) generally, but we made an exception in the case of Rockpoint, which debuted on the TSX on Oct. 9. The company was spun out of Brookfield, which retains 72 per cent effective ownership. Rockpoint is the largest operator of natural gas storage in North America, with a one-third market share in Alberta and California. The business has been operating for 37 years, and its CEO has been in gas storage for 30 years. While we love the medium and long-term outlook for natural gas demand, we are leery about low (often negative) AECO gas pricing and high volatility in western Canada.
We love that Rockpoint can benefit from this volatility (as a buyer when pricing is low or negative). There are huge barriers to entry in this industry, and new entrants are unlikely due to stringent regulatory barriers. Rockpoint should benefit from strong secular tailwinds: rising demand from power centres and increasing demand from liquefied natural gas (LNG) plants. We like its predictable earnings, low maintenance capex, high dividend yield (4.7 per cent ), and ability to grow EBITDA.
Rockpoint is a conservative way to invest in rising demand for natural gas.
Descartes Systems (DSG TSX)
Descartes Systems, described as the ‘Bloomberg of trade’, sells logistics software and services that simplify cross-border transactions and commercial trade. Naturally, its customers might have been hesitant in the wake of the Trump tariff war, but we are starting to see signs of stabilization that could take Descartes’ organic growth back to a seven to nine per cent range.
We are attracted to the stock due to its high recurring earnings. A former CEO, Art Mesher, used to brag, ‘on Day One of a quarter I know where 90 per cent of my quarterly revenues will come from and spend the next 90 days gathering the other 10 per cent. We also like the strong cashflow generation, high conversion of Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) to Free Cash Flow (FCF) (80 per cent), and high long-term organic growth. The company has $240 million cash with no debt and should produce $250 million in FCF.
The stock has been taken out to the woodshed by investors in 2025, down 27 per cent year-to-date. The Canadian software sector has been hard hit this year on concerns about the impact of AI’s impact on software. If we were a manufacturer or logistics provider in the ever-changing world of Trump’s tariffs, we would not like to rely on ChatGPT to keep up to date on the latest trade regulations. Descartes is trading well below its five-year valuation average.
While the stock has always been expensive (now at 22 times forward EBITDA), we believe investors will be well-served by buying the stock at two-year lows and trough valuations.
Mainstreet Equity (MEQ TSX)
Then: $200.78
Now: $181.71
Return: -9%
Total Return: -9%
DRI Healthcare Trust (DHT-U TSX)
Then: $12.04
Now: $15.36
Return: 28%
Total Return: 31%
Secure Waste Infrastructure (SES TSX)
Then: $14.31
Now: $17.39
Return: 22%
Total Return: 24%
Total Return Average: 15%
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Source
https://www.bnnbloomberg.ca/markets/2025/11/14/jerome-hasss-top-picks-for-november-14-2025/
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