To use iShares S&P/TSX 60 Index ETF (TSX:XIU) As a market proxy, the value of the Canadian stock market has almost doubled since 2021, delivering an annualized return of approximately 16%, including a strong 28% return over the past twelve months.
As January trading sets expectations for the year, investors should keep an eye on five influential stocks: Royal Bank of Canada (TSX:RY), Toronto Dominion Bank (TSX:TD), Agnico Eagle Mines (TSX:AEM), Enbridge (TSX:ENB), and Shopify (TSX: STORE).
Big banks: strength, but signs of fatigue
Financial services remain a cornerstone of the Canadian market, and RBC and TD continue to exert significant influence. Royal Bank, which is trading around $229 per share, appears to be plateauing after a strong run. At about 15.6 times earnings – the highest valuation since 2010 – the stock is about 29% above its normal long-term valuation. Historically, such periods have led to periods of consolidation or modest pullbacks, indicating greater downside risk as earnings growth slows.
TD stock tells a similar story. At around $130 per share and trading at 15.3 times earnings, TD also appears expensive compared to its historical norms. While both banks remain high-quality franchises with reliable dividends, January’s performance indicates that investors may be less willing to pay premium valuations even for these Steadie Eddie banks.
Gold and pipelines
There has been a shift in sector leadership. Materials have overtaken energy in the XIU’s weighting, largely driven by a rise in precious metals. Agnico Eagle Mines has been a major beneficiary, with a remarkable 294% gain since 2024. The company’s strong operating base – approximately 85% of production and 87% of reserves in Canada – adds geopolitical stability to its appeal. With 2025 production forecast at 3.3 to 3.5 million ounces and gold prices remaining elevated, the stock’s technical uptrend remains intact so far in the year.
Meanwhile, Enbridge remains attractive to income-oriented investors. Enbridge is up about 37% since 2024, yielding almost 6% and boasting an impressive 30-year dividend growth record. However, dividend increases have slowed to around 3% per year in recent years, and the stock has been on a downward trend since late 2025. Since analysts believe the stock is fairly valued, it would be interesting to see whether income investors would take a step back or remain cautious and wait for a bigger pullback.
Shopify: Growth at a premium
Shopify is the only fast-growing technology name within the group. The stock is up about 81% since 2024, buoyed by expectations of continued double-digit earnings growth. That growth comes at a high price: Shares trade around $186, or about 90 times earnings and 72 times forward earnings. Shopify shares retreated in January, showing that investors may be more cautious toward high-beta growth stocks in a more valuation-sensitive market.
Takeaway for investors
These five stocks together represent approximately 28% of the XIU and represent a cross-section of Canadian market leadership. As the year progresses, their performance can provide early clues about sector rotation, valuation tolerance and investor sentiment for 2026. By watching how these leaders behave, investors can better position their portfolios for the year ahead.
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