Brian Madden flags AI growth and Teck‑Anglo merger as top picks
Brian Madden flags AI growth and Teck‑Anglo merger as top picks
U.S. And Canadian equities rode to fresh all‑time highs after Brian Madden’s August 7 appearance on the network, only to ease back in early September. Madden, chief investment officer at First Avenue Investment Counsel, used the Sept 4 broadcast to flag two overlapping engines that he believes will lift earnings: a deepening flow of capital into artificial‑intelligence (AI) and data‑centre infrastructure, and a “friendly” merger that could propel Teck Resources into the world’s top‑five copper producers.
“We expect inflation to remain elevated through the remainder of the year and economic growth to remain supportive of corporate earnings,” Madden said, tying the macro backdrop to what he describes as a generational investment in AI. He noted that several Big‑Six bank CEOs have recently praised the accelerating Canadian AI‑related investment during conference calls, and that the upcoming Canada Investment Summit in Toronto later this month will likely flesh out those plans.
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AI‑driven capital as a market catalyst
Madden groups together “critical minerals producers that benefit from ongoing massive infrastructure buildouts” with “dominant secular growth stalwarts in non‑cyclical industries” and stocks he labels “AI babies thrown out with the bath water.” He argues that the market has mispriced such companies, creating a “mispricing” opportunity for investors. The AI theme, he says, is no longer hype but a “well‑entrenched generational investment” that is reshaping valuation metrics across sectors.
To illustrate the scale of the AI‑related spending, Madden points to the surge in data‑centre construction in the United States and a comparable up‑turn in Canada. He does not assign a specific dollar amount, but the emphasis on a “massive and ongoing build‑out of data centres globally” signals a sustained demand for the engineering and infrastructure services that will underpin the next wave of AI workloads.
Teck‑Anglo merger: a strategic leap
Teck Resources is Canada’s largest base‑metals producer, with copper and zinc mining and smearing operations spanning Canada, Chile, Peru, Alaska and a zinc‑lead complex in Trail, B.C. Madden highlights that the company has “cleaned & greened up” its balance sheet by divesting coal assets and its stake in the Fort Hills oil sands project.
Pro forma, a friendly merger with Anglo American Plc—expected to close between September 2026 and March 2027—would hand Teck a six‑percent share of global copper production, nudging it into the top five worldwide. The merger is also projected to generate $800 million in synergies and lift EBITDA by $1.4 billion at the Quebrada Blanca 2 (QB2) mill and the Anglo Collahuassi mine, which sit nine kilometres apart. Madden adds that the Highland Valley mine life extension adds 18 years of production, while debottlenecking initiatives at QB2 promise higher copper output.
He also calls attention to a “nine per cent arbitrage spread on the Anglo share‑exchange offer,” which could provide an immediate upside for shareholders. The combined entity would enjoy greater size, liquidity and a larger copper share, factors Madden believes will attract both passive and active investors.
Costco: a steady‑state retail play
Costco Wholesale Corp, the third‑largest retailer globally, is another pick in Madden’s lineup. With 931 stores serving 83 million members, the warehouse club boasts a 92 percent member‑retention rate, gross margins of 11 percent and returns on equity just under 30 percent. Madden cites “steady store expansion, superior same‑store sales growth and a growing e‑commerce capability” as drivers of a 10 percent compound sales growth rate over the past decade, while earnings have compounded at 14 percent in the same period.
