January usually acts as a psychological and strategic reset for buyers. After a strong multi-year rally in Canadian equities, buyers have entered 2026 dealing with elevated valuations and renewed questions across the sustainability of the rally.
Utilizing iShares S&P/TSX 60 Index ETF (TSX:XIU) as a market proxy, Canadian inventory market worth has practically doubled since 2021, delivering annualized returns of roughly 16%, together with a robust 28% return over the previous 12 months.
As January buying and selling units expectations for the yr, buyers ought to maintain watch on 5 influential shares: Royal Financial institution of Canada (TSX:RY), Toronto-Dominion Financial institution (TSX:TD), Agnico Eagle Mines (TSX:AEM), Enbridge (TSX:ENB), and Shopify (TSX:SHOP).
Large banks: Energy, however indicators of fatigue
Financials stay a cornerstone of the Canadian market, and RBC and TD proceed to command vital affect. Royal Financial institution, buying and selling round $229 per share, seems to be plateauing after a robust run. At roughly 15.6 occasions earnings — its highest valuation since 2010 — the inventory sits about 29% above its long-term regular valuation. Traditionally, such stretches have led to durations of consolidation or modest pullbacks, suggesting higher draw back danger if earnings development slows.
TD shares inform an analogous story. At roughly $130 per share and buying and selling at 15.3 occasions earnings, TD additionally seems to be costly relative to its historic norms. Whereas each banks stay high-quality franchises with dependable dividends, January efficiency sign buyers could also be much less keen to pay premium valuations even for these Steadie Eddie banks.
Gold and pipelines
A shift in sector management has taken place. Supplies have overtaken power within the XIU’s weighting, pushed largely by a surge in valuable metals. Agnico Eagle Mines has been a significant beneficiary, delivering a outstanding 294% achieve since 2024. The corporate’s sturdy operational base — about 85% of manufacturing and 87% of reserves positioned in Canada — provides geopolitical stability to its enchantment. With 2025 manufacturing steering of three.3 to three.5 million ounces and gold costs remaining elevated, the inventory’s technical uptrend stays intact to date into the yr.
In the meantime, Enbridge continues to enchantment to income-focused buyers. Up roughly 37% since 2024, Enbridge yields shut to six% and boasts a formidable 30-year dividend-growth file. Nevertheless, dividend will increase have slowed to about 3% yearly lately, and the inventory has been trending decrease since late 2025. As analysts consider the inventory is pretty valued, it might be fascinating to see if revenue buyers would step again in or stay cautious and look forward to a much bigger pullback.
Shopify: Progress at a premium
Shopify is the lone high-growth know-how title among the many group. The inventory is up roughly 81% since 2024, supported by expectations of continued double-digit earnings development. That development comes at a steep worth: shares commerce close to $186, or about 90 occasions earnings and 72 occasions ahead earnings. Shopify inventory pulled again in January, revealing buyers could also be extra cautious in direction of high-beta development shares in a extra valuation-sensitive market.
Investor takeaway
These 5 shares collectively characterize about 28% of the XIU and act as a cross-section of Canada’s market management. Because the yr unfolds, their efficiency might present early clues about sector rotation, valuation tolerance, and investor sentiment for 2026. Watching how these leaders behave may assist buyers higher place their portfolios for the yr forward.
