2 Canadian Blue-Chip Stocks I’d Buy Before the Next Rally

The next market rally probably won’t lift every stock equally. Investors often move first toward companies with strong balance sheets, clear growth drivers, and enough scale to survive rough patches. Blue-chip stocks fit that mood well. They don’t need to look dirt cheap to work, but need trusted businesses, visible earnings, and a reason for investors to pay up when confidence returns. That’s why we’re looking at two to watch on the TSX today.

CCO

Cameco (TSX:CCO) looks like one of the more interesting blue-chip names to buy before the next rally as uranium still sits at the centre of a huge energy story. Cameco stock ranks among the world’s largest uranium producers and owns key assets in Saskatchewan, plus fuel-services operations and a 49% stake in Westinghouse. That gives Cameco stock exposure across the nuclear fuel chain, not just one mine or one commodity price.

Governments and utilities continue to look at nuclear as a source of steady, low-emission electricity. That’s helped uranium sentiment, and Cameco stock has already had a strong run. The company also keeps benefiting from long-term contracting, where improved uranium prices gradually roll into results. The risk, of course, comes from timing. Uranium deliveries can shift quarter to quarter, and the share price already prices in a lot of optimism.

That said, the latest annual results showed real progress. In 2025, Cameco stock reported revenue of about $3.5 billion, up 11%, while net earnings jumped to $590 million. Adjusted net earnings reached $752 million, helped by stronger uranium and Westinghouse results. Free cash flow also topped $1 billion, giving the company financial strength as the nuclear cycle keeps building. That’s exactly the kind of growth investors like when a rally begins.

The valuation needs a careful look. Cameco recently traded around 121 times earnings with a $71.5 billion market cap. That’s not cheap by any normal measure. So this isn’t a value stock, but a quality growth story tied to nuclear demand. If investors keep paying up for energy security and clean power, Cameco stock could keep winning. If uranium sentiment cools, the stock could pull back hard.

IAG

iA Financial (TSX:IAG) looks like a steadier blue-chip pick before the next rally. The company operates in insurance, wealth management, savings, retirement, and dealer services. It doesn’t grab headlines like a uranium stock, but it has built a strong Canadian financial platform. That kind of business can do well when markets recover because wealth assets rise, insurance demand stays steady, and earnings power improves.

The company also had a solid year. In 2025, iA Financial reported net income to common shareholders of $1 billion, up 12% from the year before. Diluted earnings per share (EPS) reached $11.29, up 16%, core earnings rose 13% to $1.2 billion, while core diluted EPS climbed 16% to $12.96. Its core return on equity came in at 17.1%, showing the business continued to generate strong profits from shareholder capital.

Recent news has also leaned positive. IAG raised its dividend again, showing confidence in cash flow and capital strength. It also continued to buy back shares, which can lift per-share earnings over time. Its solvency ratio remained comfortably above minimum requirements, giving the company room to invest, return capital, and handle market swings.

The valuation still looks reasonable. The stock recently traded around $16 billion with a price-to-earnings (P/E) ratio around 15 times. That’s not a bargain-basement price, but it looks fair for a company growing earnings, lifting its dividend, and producing strong returns on equity. The risks come from weaker markets, insurance claims, credit pressure, and interest-rate shifts. Still, IAG looks like the kind of quiet compounder investors often appreciate more once a rally broadens.

Bottom line

Cameco stock and iA Financial offer two very different ways to prepare for the next rally. Cameco stock brings bigger upside through nuclear growth, but also a richer valuation, while iA Financial brings steadier earnings, dividends, and financial strength. Together, they show why blue-chip investing doesn’t have to feel boring. Sometimes the best rally picks are already strong companies waiting for the market to notice again.

The post 2 Canadian Blue-Chip Stocks I’d Buy Before the Next Rally appeared first on The Motley Fool Canada.

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Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends Cameco. The Motley Fool has a disclosure policy.