Brookfield Leads RBC Analyst’s Top Diversified Financial Picks
Recent insights from RBC Capital Markets analyst Bart Dziarski highlight Brookfield Corporation (BN-T) as a leading pick in the diversified financial sector. Dziarski’s analysis focuses on the fundraising, deployment, and monetization environment for Brookfield entities, which also include Brookfield Asset Management (BAM) and Brookfield Business Partners (BBU). As the market shifts toward Q4 2025 earnings, there are distinct expectations surrounding these entities.
Key Highlights from RBC’s Analysis
- Brookfield Entities Outlook: A positive forecast is presented for BAM in Q4 2025 earnings, while BN’s outlook remains neutral.
- Property and Casualty Insurance Sector: The firm states that results for key insurers like DFY, FFH, IFC, and TSU will likely not impact current investor sentiment.
- TMX Earnings: Strong performance is anticipated for TMX, thanks to robust trading volumes and heightened IPO activity.
- EFN Projections: The projection for 2026 may bolster consensus earnings revisions upward.
- GSY Earnings Caution: There is a cautious stance on GSY for Q4 2025 as guidance may be subject to cuts.
Top Picks in Diversified Financials
Dziarski identifies the top three picks for investors in diversified financials:
- Brookfield Corporation (BN-T)
- Element Fleet Management
- Fairfax Financial
These selections reflect the firm’s confidence in the structural strength of Brookfield’s business model, particularly as macroeconomic conditions remain favorable for capital markets in 2026.
Investor Sentiment in Technology Sector
In contrast to the optimism in diversified financials, the technology sector faces skepticism. Evercore ISI strategist Julian Emanuel points to a negative sentiment approaching the Q4 2025 earnings season, particularly regarding equities driven by artificial intelligence.
- Market Positioning: Information technology is experiencing its lowest relative next 12 months price-to-earnings ratio in the post-pandemic climate.
- Pressure Points: Concerns regarding software companies and their ability to monetize AI are rising, particularly with ONCL’s recent 10.8% drop.
- Short Interest: High levels of short interest in certain tech stocks may present opportunities for investors.
Recommendations for Investors
BofA Securities’ head of global research, Candace Browning Platt, emphasizes a strategic approach amidst market optimism. The January Fund Manager Survey indicates a bullish sentiment not seen since July 2021.
Despite a record low in cash levels at 3.2%, caution is advised regarding potential equity corrections. Platt suggests the following actions:
- Increase hedging against market volatility.
- Consider diversified investments in safe havens.
- Monitor the expected surge in defense spending, projected to reach $371 billion, significantly increasing from 2024 levels.
Key defense stocks positioned for success include RTX Corp, Lockheed Martin, Northrop Grumman, and L3Harris, thanks to anticipated adaptations in AI and automation.
In summary, as diversified financials show promising trends, the technology sector grapples with uncertainty. Investors are advised to navigate these mixed signals strategically to optimize their portfolios.
