Industrials the ‘single biggest winner’ in federal budget: Scotiabank

The 2025 federal budget offers clear upside for select sectors and Canadian firms, with Industrials “the single biggest winner,” analysts at Scotia Capital say.

The budget, tabled Tuesday, was described in a research note as a “constructive step” towards long-term productivity, though the analysts caution repeatedly that its success depends on execution.

“[The budget] signals a clear government preference for investing in domestic production, supply chains, and long-term infrastructure over short-term consumer stimulus,” the note said. “Investors will likely see this as a green light for real-asset and technology-focused investment themes within the Canadian market.”

The analysts highlight $280 billion in planned capital spending over five years, spanning infrastructure, defence, housing and technology, designed to act as a “force multiplier” by attracting as much as $1 trillion in public-private investment. They describe the plan as a pivot from consumption to construction — a shift they see as broadly supportive of companies tied to physical infrastructure, energy systems, housing and other tangible capital projects rather than consumer spending.

• Industrials are expected to benefit most as the budget “aims to renew Canada’s industrial strategy.” AtkinsRéalis (ATRL.TO), Stantec (STN.TO, STN), WSP Global (WSP.TO), Finning (FTT.TO), Toromont (TIH.TO) and Wajax (WJX.TO) are listed among early winners.

• Aerospace and defence: the plan is described as a “push to restore military capacity and capabilities,” with Ottawa “reaffirming the existing commitments to NATO’s defence-spending targets … while launching a new Defence Industrial Strategy to bolster domestic supply chains.” Bombardier (BBD-B.TO), CAE (CAE, CAE.TO), MDA Space (MDA.TO) and Exchange Income (EIF.TO) are expected to gain from procurement and modernization.

• Mining and critical minerals: Budget 2025 combines capital spending with measures that could “align project stakeholders and even catalyze progress on stalled projects.” The new Critical Minerals Fund and related incentives favour Foran Mining (FOM.TO), Newmont (NEM) and Skeena Resources (SKE.TO, SKE), tied to early “nation-building projects.”

• Energy gets a “mixed” outlook: clean-energy credits and LNG incentives should help, but “the wording in the budget about the previously proposed oil and gas emissions cap may imply it could still come into effect.”

• Utilities and clean power: “The energy transition cannot happen without modernizing the grid,” the note said, citing “specific mention of ‘building clean power grids for a sustainable future,’ and continued policy support for electrification [that] may attract significant capital-investment opportunities for utilities.”

• Financials and fintech: open banking is described as “a growth opportunity for non-bank competitors and new entrants,” expected to “lower barriers to entry, encourage innovation, and promote partnerships between fintechs and traditional banks.” Propel Holdings (PRL.TO), goeasy (GSY.TO) and Power Corp. (POW.TO) are highlighted as likely beneficiaries.

• Transportation: analysts point to “a new trade diversification strategy to boost exports” that will “strengthen collaboration with reliable trading partners around the world.” Air Canada (AC.TO) and Exchange Income could gain from airport and tourism initiatives, while Canadian National Railway (CNR.TO) and Canadian Pacific Kansas City (CP.TO, CP) benefit from the Trade Diversification Corridors Fund.

• Real estate: apartment-REIT valuations “look good for those willing to take a six-month-plus view (i.e., past the spring leasing season),” the note says.

• Consumer sectors: the outlook for consumer-oriented companies is deemed “neutral,” with Scotia noting “these sectors are not a primary focus” of a budget whose core is “about investment, not consumption.”

Scotiabank’s analysts stress that the budget’s success is far from assured. Their economics team — and economists at other major banks — warn that “delivery is everything and execution risks loom large,” citing the potential for project delays and bureaucratic bottlenecks.

Three broad risks stand out: the minority government must still secure parliamentary approval; the plan’s ambitions face “considerable execution risk”; and the “real transformation” depends on private capital showing up as hoped. Across the banks, economists note that the success of the $1 trillion public-private goal will only become clear over time.

Investors and analysts are now watching for early signs of momentum — infrastructure contracts moving to award, and concrete details on the new Defence Industrial Strategy and the $2 billion Critical Minerals Sovereign Fund.

John MacFarlane is a senior reporter at Yahoo Finance Canada. Follow him on X @jmacf

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