Paul Harris — How to Buy Underperforming Stocks Without Getting Burned

MDA Space is a Toronto-listed satellite-technology company. A viewer asked whether to play the space race through MDA instead of buying into SpaceX's IPO, and Harris agrees: "better to own MDA than SpaceX."

His case: MDA beat its numbers, raised its forecast, has a big order book (~$4.3B of work already booked) and a strong balance sheet. The satellite business is the genuinely good part of the space story, and as modern defense shifts from big rockets to satellites and other tech, MDA increasingly benefits from rising defense budgets too.

Telus is one of Canada's big phone/internet companies. Harris owns it (not rival BCE) because a new CEO — a former CIBC bank chief who already sat on the board — is arriving and is likely to cut the very high dividend (~11%) and squeeze out costs.

The market hasn't "front-run" the good news because nobody yet knows exactly what he'll do, and the stock is at its lowest since 2013. Harris would add here: these telecoms won't grow their sales much, but they can grow profits by restructuring, cutting debt and using AI to lower costs.

BCE (Bell) is the other Canadian telecom giant. It had a rough stretch, cut its dividend in half to pay down a heavy debt load, and is now "forming a base" — the stock has stopped falling apart.

Harris's read: the ~5.5% dividend is now dependable and won't be cut again, so it's back to being the steady income stock people used to buy. He doesn't own it (he prefers Telus's bigger turnaround), but he's constructive on it as a reliable, recovering name rather than a broken one.

CAE is a Canadian company that makes flight simulators and training for airlines and militaries. Its civil (airline) side has been cyclical and disappointing — that's the part that's dragged the stock down.

But its defense business can actually grow as Canada and allies ramp up military spending, and a new CEO (from defense-maker Northrop Grumman) has been refreshingly honest about past mistakes. Harris thinks it's "worth buying here" — buy on the dips and accept that the civil side stays cyclical.

Alphabet (Google) was his best past pick — it doubled. He bought it when it traded at 18x earnings (cheaper than the market) and everyone assumed AI would destroy Google search. Instead AI, the cloud business, YouTube and the Waymo robotaxi are all growing fast.

He admits he made the mistake of selling near the peak Gemini-panic, then learned to "never sell" quality. He still owns it. The one risk he can't fully answer: Google is pouring its cash flow into AI and even did a rare big stock sale to fund it — will that heavy spending ever stop, and what happens if it does?

Stryker makes medical devices — knee, hip and spine implants and surgical tools. The stock dipped because analysts had over-estimated how much pent-up surgery demand would persist after COVID, and the company had a cyber attack.

Harris still owns it and likes the long-term story: an aging population needs more of these procedures, the devices get patients out of the hospital faster (which saves money), and surgeons rarely switch suppliers — the sales reps are literally in the operating room. A durable, sticky business catching a temporary dip.

Meta (Facebook, Instagram) is his favorite new idea — he calls it the cheapest AI winner. It trades around 17x earnings, well below the overall market, near a one-year low, yet it beat expectations and is growing faster than most.

Crucially, you can see AI working in its advertising numbers — it's not a promise, it's showing up in revenue. The risk: Meta spends enormous sums on AI chips and data centers that only serve itself, with no cloud-rental business (like Google's) to help pay for it, and Zuckerberg has a history of expensive side-bets (the metaverse). He thinks the cheap price more than makes up for that risk.

Microsoft fell to a new low on the fear that AI will let companies "rip out" Office, Word and the rest. Harris thinks that fear is absurd: a business focused on making its own product won't rebuild its entire software stack on some untested newcomer, and there's a huge amount of legal/compliance plumbing baked into incumbent software.

He concedes Microsoft's Copilot AI assistant is clunky today, but giant institutions are too interconnected and risk-averse to switch. Meanwhile its Azure cloud grew 37% in a quarter, and you can now buy the stock at ~22-25x earnings versus 35-40x not long ago — a great business at a much fairer price.

EssilorLuxottica is a French-Italian eyewear champion — it makes most of the world's lenses and owns Ray-Ban, Sunglass Hut and the licensed glasses for luxury brands like Dior and Chanel. The stock is "in the dumps," partly on fears that its Meta Ray-Ban smart-glasses partnership makes it a risky "tech" bet.

Harris says that's a misread: it's not a tech company, it's a steady eyewear business that grows around 3-5% a year. The appeal is the "annuity" — once people start wearing glasses they keep buying, and more screen time plus an aging population means ever more customers. A cheap, durable compounder the market has mistaken for something riskier.

CNQ is a large Canadian oil and gas producer he has owned and praises highly — it's run by people who make smart acquisitions when oil crashes (buying assets cheaply and integrating them well) and who deliver projects on time and on budget. "An incredibly well-run business."

But he trimmed his position after a big run-up and wouldn't buy at today's price — he expects oil to fall back to lower levels ("there's too much oil in the world"), and that dip is when he'd add more. So it's a great company on a "wait" — positive on the business, neutral on buying right now.

FedEx is the global package-delivery company. Harris doesn't own it, but he respects its turnaround: it spun off its slower freight (less-than-truckload) division, narrowed its focus, and now manages for "return on invested capital" — i.e. only doing things that actually earn a good return.

He rates it ahead of rival UPS, but delivery is an inherently cyclical business he doesn't love, so it's an appreciate-the-progress call rather than a buy.

SpaceX is Elon Musk's private rocket-and-satellite company, which recently let investors buy in. Harris "wouldn't touch it with a 10-foot pole": he thinks it's wildly overvalued, and he's stunned that it raised $25 billion of debt yet got a solid investment-grade (triple-B) credit rating before it even makes consistent cash — something Netflix and Amazon had to wait years for.

His point is that bond investors only care "can I get my money back?", not Mars dreams. He concedes the satellite business is genuinely valuable (which is why he'd rather own MDA), but rates the AI part as weak and the headline rocket-to-Mars story as unproven — classic late-cycle bubble behavior.

Tesla, he argues, hasn't done as well as people think. China's BYD now makes a better electric car at a lower price with a better battery, and Musk "wasted" money and attention on the Cybertruck instead of building an affordable $30-35k car.

He also thinks Musk is spread too thin — distracted by politics (Doge) and X/Twitter — and is far behind on robotaxis, where Google's Waymo is already operating well in major cities. His timelines, Harris says, simply won't be met; Musk is "a great promoter," which is different from a great operator.

BlackBerry was the best stock on the Toronto exchange in 2026 (up ~200%), but Harris won't chase it. The rally is off a very low base, and its two real businesses — cyber-security and the "internet of things" — are crowded with competition.

He calls it "highly speculative" and still an unproven turnaround. People compare it to Bombardier's famous comeback, but he says that's a bad analogy: Bombardier had heavy Quebec government ("Quebec Inc.") support, and BlackBerry has nothing like that backstop.

Campbell's (soup and snacks) sits near a 30-year low, and it's Harris's textbook "value trap" — a stock that looks cheap but is cheap for a reason. The numbers have been "horrific," the snack business is terrible, and it carries a lot of debt from past acquisitions.

The deeper problem: big packaged-food brands used to command supermarket shelf space, but that power has eroded as healthier upstart brands crowd in. He'd never buy it, and lumps Conagra and Kraft Heinz in the same "very bad businesses" bucket.

Nike has a great global brand — everyone wears the shoes at the World Cup — but the stock is "another lemon." Competitors have taken share, and Harris admits he can't fully explain why a company with such a strong brand keeps making missteps; "every time they do something, it's not the right thing."

He owns it only because of his strict "never sell" rule (and a 25-40-year time horizon), not because he'd buy more. He uses turnarounds like this to make the point that a great brand alone doesn't fix a broken business — you need an operator who systematically repairs it rather than just stripping it for a quick stock pop.