CIBC's Sid Mokhtari discusses top stocks and ETFs amid market risks

As financial markets continue to evolve, understanding the factors influencing stock performance becomes paramount for investors. With key indices like the S&P 500 and Nasdaq Composite hitting significant milestones, the current landscape presents both opportunities and challenges. This article delves into insights from Sid Mokhtari, a leading market technician at CIBC, who shares his perspectives on market trends, sector performance, and stock selections that are poised for growth.

Current Market Landscape: Highs and Concerns

Recently, the S&P 500 surpassed the 7,000 mark, while the Nasdaq Composite crossed 24,000 for the first time. The S&P/TSX Composite Index is also nearing an all-time high, reflecting a strong momentum in the market.

Despite these encouraging numbers, investors are cautious about rising inflation and potential economic growth slowdowns due to increasing oil prices. This duality of optimism and concern is shaping investment strategies as the first-quarter earnings season approaches.

Insights from Sid Mokhtari: An Expert's Perspective

To gauge the sustainability of the current rally, we turn to Sid Mokhtari, CIBC's chief market technician. Mokhtari's expertise in stock selection and market forecasting has consistently yielded superior returns, making his insights particularly valuable during these volatile times.

His approach involves meticulously screening stocks within the S&P/TSX Composite Index, focusing on the top 100 companies by market capitalization. Mokhtari's disciplined methodology has consistently outperformed the broader index, showcasing his ability to navigate various market conditions.

Performance Overview: Stocks and Returns

In the first quarter, Mokhtari's curated portfolio gained 4.3%, surpassing the S&P/TSX Composite Index by approximately 0.7 percentage points. Over the last four years, his stock selections have consistently outpaced the index, with notable performances:

• 2025: 51.3% vs. 28.3% (S&P/TSX Composite Index)
• 2024: Outperformed by 5.8 percentage points
• 2023: Outperformed by 6.3 percentage points
• 2022: Outperformed by 2.7 percentage points

This record highlights the effectiveness of Mokhtari's research-driven investment philosophy.

Sector Analysis: Where to Invest

Mokhtari's most recent stock picks encompass a diversified basket across multiple sectors, including energy, finance, industrials, and utilities. His portfolio for April features nine new stocks, with an emphasis on:

• Energy: Enerflex Ltd., International Petroleum Corp., and Peyto Exploration & Development Corp.
• Financials: Great-West Lifeco Inc. and National Bank of Canada.
• Industrials: Canadian National Railway Co. and Mullen Group Ltd.
• Consumer Discretionary: Restaurant Brands International Inc.
• Materials: Nutrien Ltd.
• Utilities: Capital Power Corp.

Technology Sector: A Bright Spot

Amidst geopolitical tensions and rising oil prices, the technology sector has shown remarkable resilience. According to Mokhtari, semiconductor and AI-related companies are leading the charge, demonstrating strong breadth expansion.

Both the S&P 500 and Nasdaq Composite are benefiting from positive momentum in tech, with several ETFs gaining traction:

• Roundhill Generative AI and Technology ETF
• iShares Semiconductor ETF
• VanEck Semiconductor ETF

Mokhtari emphasizes that tech companies are generating significant revenue and positive earnings revisions, positioning them well for upcoming earnings reports.

Specific Stock Highlights: Celestica and Intel

In Canadian markets, Celestica has emerged as a top performer, recently breaking above critical resistance levels. Mokhtari identifies a bullish pattern in Celestica's stock chart, indicating potential for further gains, projecting a price target as high as $590.

In the U.S. market, Intel has also garnered attention, with Mokhtari noting its long-term base building. Alongside Dell and Hewlett-Packard, Intel's resurgence reflects a broader trend of older tech names gaining strength.

Financial Sector Analysis: Strong Performers

The financial sector has demonstrated impressive returns, with Mokhtari highlighting National Bank, CIBC, and the Bank of Montreal as key players. These banks are well-positioned for continued growth, especially as the earnings season approaches.

Mokhtari suggests a price target for National Bank between $205 and $207, emphasizing the importance of dip buying in this sector. He notes that the bank's strong earnings quality and momentum can provide a defensive advantage in the current market climate.

Energy Sector: Unleashing Potential

The energy sector is also showing promise, with large-cap stocks such as Suncor, Cenovus, and Imperial Oil reporting double-digit year-to-date returns. Mokhtari mentions these companies as potential cash flow generators if oil prices remain stable above $80.

• Focus on dip buying to capitalize on potential growth.
• Monitor sector breadth, which currently stands around 80%.

Market Breadth and Volatility: A Cautious Outlook

While certain sectors show resilience, overall market breadth remains fragile. Mokhtari indicates that weak breadth conditions suggest a selective investment approach. The ongoing geopolitical issues have led to segmented recoveries, particularly in technology, energy, and utilities.

For investors, it's essential to remain vigilant, as market conditions may lead to increased volatility, especially with the overlap of the U.S. presidential cycle and a fourth year of a bull market.

Regional ETFs and Investment Strategies

Mokhtari advocates for investing in emerging markets, particularly in Latin America, where ETFs like Franklin FTSE Latin America and iShares Latin America 40 are gaining attention. He also highlights the iShares MSCI Taiwan ETF, which focuses on semiconductors.

In terms of thematic ETFs, Mokhtari's rankings have expanded to 101, including:

• Procure Space ETF, currently ranked number one.
• Global X Lithium & Battery Tech ETF as a strong contender.

Conclusion: Navigating the Investment Landscape

As we navigate through these uncertain times, Mokhtari's insights offer valuable direction for investors. His emphasis on sector selection, strong fundamentals, and careful stock picking will be crucial in the coming months. With the potential for increased volatility on the horizon, the focus should be on leveraging opportunities while mitigating risks.