Visit this year's Top 1000 rankings of Canada's most profitable companies and find more tables, multimedia and analysis in Report on Business's full Top 1000 section. The most comprehensive database of Canadian corporate financial information is available for purchase in spreadsheet format here.
What if → Donald Trump is elected U.S. president?
Then → Be very worried about Canadian companies with large operations in Mexico — and there are plenty of them, in many sectors. Here are five of the largest: Magna International (No. 10), with 30 parts plants and 40,000 employees; Bank of Nova Scotia (No. 3), with 876 branches and a staff of 13,500; Goldcorp Inc. (No. 997), with three mines and 3,000 employees; Bombardier (No. 999), with about 3,200 workers making planes and trains at three factories; and TransCanada Corp. (No. 984), which has six gas pipelines and 152 employees. Looking north, Trump doesn't like softwood lumber imports from Canada and says he wants a "big, big chunk of the profits" if TransCanada's Keystone XL pipeline goes ahead. If he wins in November and many Americans flee to Canada, consider moving south, buying their houses on the cheap, and loading up on shares of U.S. shale oil and coal producers.
What if → Anti-free-trade sentiment in Europe keeps rising?
Then → It may be best to stick with companies that already have solid roots in Europe. As of early June, it looked like U.K. voters were evenly divided on Brexit, and the Canada EU Trade Agreement, completed in 2014, has yet to be ratified by the European Parliament. Even if it opens the door wider to Canada, however, our biggest exports will still be minerals and other commodities. For more value-added, consider these three options: Power Corp. (No. 14) and Power Financial (No. 11), which have large European investments in building materials, French oil giant Total and Pernod Ricard wines and spirits through Pargesa Inc., the decades-old alliance between the Desmarais family and Belgium's Frère clan; Magna International (No. 10), which operates vehicle and parts factories in Europe through Austria-based Magna Steyr; or Toronto-based Northland Power (No. 385), which is building one of Europe's largest offshore wind farms in the North Sea.
What if → The U.S. Federal Reserve keeps increasing interest rates?
Then → Avoid precious metals, which benefit most from inflation, but consider investing in just about any other healthy Top 1000 company, particularly solid dividend payers. Fed chair Janet Yellen raised rates for the first time in eight years last December, and seems ready to do it again as the U.S. economy gets hotter. Historically, a strong U.S. economy is one of the best things for Canadian stocks. Fed rate increases also make it easier for Bank of Canada Governor Stephen Poloz to keep doing nothing with Canadian rates. He doesn't have to lower them to try to help the Alberta oil patch, which could also weaken the loonie and aggravate a real estate bubble. Yet he doesn't have to raise them, either, which would cool financial services stocks and REITs. With the Government of Canada 10-year bond yielding a paltry 2% or less recently, even staid old banks and pipelines, such as TransCanada Corp. (No. 984) and Pembina (No. 46), look sweet, with dividend yields near 4%.
What if → China's slump gets worse?
Then → The share prices of big mining and forest products companies based in B.C., in particular, are going to keep getting hammered. Canada is mainly a supplier of raw materials to China — pulp, lumber and other forest products, canola and copper. Share prices of the biggest public West Coast forest products companies—Canfor (No. 112), West Fraser Timber (No. 113), Western Forest Products (No. 131) and Catalyst Paper (No. 832) — have all slumped since 2014 as China's construction and manufacturing boom has sputtered, although those companies have been cushioned by stronger U.S. sales. Large miners have been hit harder, particularly Teck Resources (No. 991) and First Quantum Minerals (No. 969), both hefty copper suppliers to China. As with other tumultuous foreign markets, if commodity booms and busts scare you, look to more value-added—and perhaps duller — businesses. About a third of Manulife Financial's (No. 13) earnings come from Asia, and last year it became the first foreign-invested joint-venture insurer to be allowed to have its agents sell mutual funds in China.
What if → World oil prices remain low?
Then → Both environmentalists and crude markets will be telling Alberta oil sands producers the same thing: Oil doesn't make much sense right now. But it's very hard to slash production at huge long-term projects, or delay them. In February, TD Securities released a report showing that the break-even crude price for 10 big oil sands projects is about $47 (U.S.) a barrel. The price has fluctuated between $40 and $50 for most of the past two years, and no one is predicting a breakout any time soon. Investors have already done the logical things: stuck with the strongest and most diverse of the big publicly traded oil sands producers — Suncor (No. 989) and Imperial Oil (No. 22) — while avoiding shares of the weaker ones — MEG Energy (No. 985) and Husky Energy (No. 995). So where is the upside in any of them? That's still a very good question.
What if → Brazil degenerates into political and financial chaos?
Then → What else is new? The investing trade-off in emerging markets is almost always short-term volatility versus big long-term growth potential. This spring, Brazil's economy was in a tailspin and President Dilma Rousseff was headed for a messy impeachment, yet the country's stock market soared. Much of Brazil and Canada's dealings are in mining and metals — Canadian gold miners are active in Brazil, and Brazil's Vale SA bought Inco Ltd. here in 2006. But if you have little appetite for commodities tumult, look for sectors that will keep chugging along. Brazil is the world's fifth-largest milk producer, but its dairy industry is still fragmented. Montreal-based Saputo Inc. (No. 35) bought Argentina's third-largest dairy in 2003 and figures it can be a consolidator next door. TSX-traded Brookfield Infrastructure Partners LP is part of the Brookfield Infrastructure Group, which has $10 billion of its $59 billion in global holdings invested in South America, including Brazilian toll roads, ports and utilities. Even amid turmoil, day-to-day needs remain.