Aecon Group Inc. (ARE:TSX) saw its shares surge 17% this week after the company emerged as a key winner in the Greenlight Electricity Centre power plant project near Edmonton. The development prompted Raymond James analyst Frederic Bastien to raise his price target to $60 from $51 and upgrade the stock to outperform from market perform.
Project Details and Analyst Reactions
Aecon was selected via a consortium in which it holds a majority stake to build the 932-megawatt power generation facility, which will supply electricity to an as-yet-unconstructed data centre reportedly linked to Meta Platforms Inc. Shares closed Friday at $51.51. Aecon's share of the work is estimated at $1.7 billion of the total current project cost of $4.6 billion.
Bastien noted in a July 3 note that the contract represents "the most significant power infrastructure opportunity set for Aecon in our more than two decades covering the stock." Construction is expected to begin in the third quarter of 2026.
TD Cowen analyst Michael Tupholme estimated in a July 2 note that the project could add $450 million in revenue annually during peak construction years from 2027 to 2029. Tupholme maintained his price target of $61 for Aecon and estimated that the Greenlight project alone could boost the stock price by $8. He said Aecon has historically traded at a discount to its peers and that the market was not giving Aecon "enough credit for data-centre related opportunities."
Market Performance and Analyst Consensus
Aecon has a 12-month price target of $54.18 based on the calls of 11 analysts, according to Bloomberg. The stock's recent jump reflects renewed investor confidence in the company's ability to secure large-scale infrastructure projects.
Rosenberg's Second-Half Picks
David Rosenberg, president of Rosenberg Research & Associates Inc., revisited his investment calls for the second half of the year. Despite the easing of the Middle East conflict and declining oil prices, Rosenberg believes renewable energy continues to have growth potential. "Geopolitical risk has not derailed the renewable-energy and critical-infrastructure themes. If anything, it has strengthened them," he said.
Rosenberg's model portfolio holds the iShares Energy Storage & Materials ETF (IBAT) and the iShares Global Clean Energy ETF (ICLN), which are up 48.4% and 18.7% year-to-date as of June 26, respectively. He described the investing theme as "resilient" despite recent momentum loss.
On cybersecurity, Rosenberg noted that the Global X Cybersecurity ETF (BUG) is up nearly 40% since the end of March. He expects the trade "provides long-run potential as the threat of cyberattacks continue to grow in the new AI age."
Canadian banks also outperformed, with the S&P/TSX composite banking index outgaining the S&P 500 and European bank indexes by 19 and 15 percentage points, respectively. Rosenberg said valuations are stretched but profitability, low leverage, and high dividend growth make the story appealing, especially after the Office of the Superintendent of Financial Institutions cut the capital buffer banks must hold.
Scotiabank's Oil Patch Picks
Scotiabank Global Equity Research analyst Kevin Fisk remains bullish on Canadian oil producers despite falling oil prices and a recent energy stock selloff. He cited a weaker loonie, tighter price differentials between Canadian and U.S. benchmarks, and the need to replenish global oil stockpiles as supporting factors.
Fisk's top three picks are Cenovus Energy Inc. (CVE:TSX), Suncor Energy Inc. (SU:TSX), and Advantage Energy Inc. (AAV:TSX). He said Cenovus produces some of the "lowest-cost" thermal bitumen and expects the company to deliver a multi-year free-cash-flow inflection, with 100% of excess free cash flow returned via buybacks. Suncor's transition toward thermal production is "nothing short of remarkable," and the company is already returning 100% of excess free cash flow to shareholders. Advantage remains "the most undervalued Canadian natural gas producer," but Fisk expects a turnaround with large-scale capital spending behind the company and a resumption of "meaningful" share buybacks.
