2 Canadian Stocks Built to Profit When the TSX Heats Up

If you want Canadian stocks to ride the next TSX record high, you want two forces working at the same time. First, you want a business that can keep growing even if the economy cools. Second, you want a story the market can get newly excited about when sentiment grows bullish.

So if you’re holding cash on the sidelines or maybe looking to put that $7,000 TFSA contribution to work, these two Canadian companies are worth a close look.

Record highs don’t show up because everything feels safe, but show up when investors decide the risks look manageable and the earnings look durable. That usually rewards companies with repeatable cash flow, clear catalysts, and management teams that keep delivering while everyone else debates macro headlines. So today, let’s look at two stocks to consider.

BAM

Brookfield Asset Management (TSX:BAM) fits the record-high setup as it profits when other people take risk again. It runs a global alternative asset management platform across infrastructure, real estate, renewable power, private equity, and credit. When markets warm up, fundraising improves, performance fees can come back into focus, and the market tends to pay up for that kind of operating leverage. It also has a built-in Canadian advantage, feeling familiar to TSX investors, but earning a lot of money globally, which can smooth out the bumps when Canada’s economy slows.

Over the last year, BAM pushed harder into private credit and wealth solutions, and kept highlighting the shift toward private markets as institutions hunt for returns that don’t depend on public market calm. It also framed artificial intelligence (AI) as an infrastructure story rather than a software story. This fits its long-duration assets and ability to raise large pools of capital for big projects.

In its latest full-year update, BAM said it raised a record $112 billion in 2025, including $35 billion in the fourth quarter alone. It reported quarterly fee-related earnings of $867 million, up 28% year over year, and quarterly distributable earnings of $767 million, up 18%. It also raised the quarterly dividend by 15%, which translates to an annual dividend of about $2.75 per share.

WSP

WSP Global (TSX:WSP) is a global engineering and professional services firm that designs and manages complex projects in transportation, buildings, water, environment, and energy. When governments and businesses spend on infrastructure, WSP benefits. When the market gets excited about growth again, it often gets treated like a steady compounder rather than a cyclical gamble, as it doesn’t need a perfect economy to keep winning work.

Investors sometimes overlook WSP in hot markets since it doesn’t sound flashy. Then a backlog update lands and everyone remembers that predictable demand can be exciting when it scales. Over the last year, it kept building on acquisitions and strengthening its position in power and energy — a strong point as grid upgrades and energy transition projects run for years, not quarters. It has also kept proving it can integrate purchases while lifting margins, which is the hard part.

That’s especially relevant now, since WSP completed its acquisition of TRC Companies in February, a US$3.3 billion deal that makes WSP the largest engineering and design firm in the United States by revenue and creates the No. 1 power and energy platform in the U.S. The acquisition adds about 8,000 professionals and deep expertise across power delivery, transmission, distribution, and advisory services. For investors watching WSP, this is no longer a company quietly building its U.S. presence; it just made a single move that repositions it at the top of the American market in one of the highest-demand sectors in the economy.

WSP reported backlog of about $17.1 billion at the end of 2025 and highlighted record free cash flow of about $1.7 billion for 2025. It also reported adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $2.56 billion for the year, up 17.2% from 2024, and it said results landed at or above the high end of its revised outlook ranges. Those figures don’t yet reflect TRC, which generated about US$1.5 billion in revenue for the trailing period before closing — meaning WSP’s 2026 numbers are going to look materially larger. Valuation is the trade-off, with a market cap around $29 billion and a trailing P/E at approximately 30. The stock currently pays a modest dividend yield of around 0.65%.

Bottom line

If you’re a Canadian investor looking to put money to work in companies that can benefit from both a recovering market sentiment and a world that still needs to build things, these two names offer different but complementary exposure. BAM gives you leverage to the return of risk appetite and private capital flows. WSP gives you a compounder that just made a transformational acquisition at exactly the right moment in the infrastructure cycle. Both pay dividends while you wait.

Watch for BAM’s next fundraising update and WSP’s first quarterly results that include TRC — those will be the clearest signals of whether the theses are playing out.

COMPANYRECENT PRICENUMBER OF SHARES YOU COULD BUY WITH $7,000ANNUAL DIVIDENDTOTAL ANNUAL PAYOUT ON A $7,000 INVESTMENTPAYOUT
FREQUENCYBAM$58.64119$2.75$327.25QuarterlyWSP$217.5232$1.50$48Quarterly

Neither one is immune to a pullback, but both look like the kind of businesses the market tends to notice more when records start falling.

The post 2 Canadian Stocks Built to Profit When the TSX Heats Up appeared first on The Motley Fool Canada.

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More reading

• TFSA Millionaire Goals: Here’s How Much You Should Save Monthly
• 2 Canadian Stocks That Could Turn $100,000 Into $1 Million
• Undervalued Canadian Stocks to Buy Now
• A Year Later: 3 “Boring” Canadian Stocks That Kept Winning
• How to Use Your TFSA to Double Your Annual Contribution

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends Brookfield Asset Management and WSP Global. The Motley Fool has a disclosure policy.