The Canadian market is packed with mega-cap names like the banks, railways, and energy giants, but some of the best long-term opportunities are often found one tier lower. Mid-cap companies can still grow aggressively while already having proven business models, improving cash flow, and institutional interest starting to build. In 2026, investors are also navigating a market shaped by falling interest rates, sticky inflation, AI-driven infrastructure spending, and renewed commodity strength. That combination is creating opportunities in several overlooked Canadian names trading below what many analysts believe their long-term value could be.
Here are five undervalued mid-cap Canadian stocks that still appear to be flying under the radar.
#5 — Celestica Inc. (TSX: CLS) — $514 CAD/share
Why Now
Celestica has become one of the biggest quiet winners of the AI infrastructure boom. Demand for networking hardware, data-centre equipment, and hyperscaler infrastructure continues to surge as cloud and AI spending accelerates globally. Despite the stock’s strong run over the past year, many investors still underestimate how deeply connected Celestica is to AI supply-chain growth.
The Moat
Celestica’s advantage comes from its high-complexity manufacturing capabilities and long-standing enterprise relationships. Large customers do not switch suppliers easily when reliability, logistics, and precision manufacturing are critical. The company also benefits from scale and operational efficiency that smaller electronics manufacturers simply cannot match.
Financial Snapshot
Revenue growth has remained strong thanks to its Connectivity & Cloud Solutions segment. Margins have steadily improved over the past several quarters, while free cash flow generation continues to strengthen. The company has also maintained a relatively healthy balance sheet with manageable debt levels and expanding operating leverage.
One Key Risk
The biggest risk is customer concentration. A slowdown in AI infrastructure spending or weaker enterprise demand could quickly impact revenue growth. Because the stock has already rallied significantly, any earnings miss could also trigger sharp volatility.
#4 — Hammond Power Solutions Inc. (TSX: HPS.A) — $311 CAD/share
Why Now
Hammond Power Solutions continues benefiting from one of the strongest industrial trends in North America: grid modernization and electrification. From AI data centres to renewable energy projects and manufacturing reshoring, demand for transformers and power equipment has exploded over the past two years.
The Moat
Hammond’s competitive edge comes from its specialized transformer manufacturing expertise and deep industrial relationships. Transformer shortages across North America have also created pricing power for established suppliers. This is not an easy industry to enter quickly due to manufacturing complexity and certification requirements.
Financial Snapshot
The company has delivered exceptional revenue growth while maintaining strong operating margins. Return on equity and free cash flow generation have both improved substantially since 2023. Unlike many industrial companies, Hammond also carries a relatively conservative balance sheet, giving it flexibility during economic slowdowns.
One Key Risk
The stock’s cyclical exposure remains the biggest concern. If industrial spending weakens or infrastructure investment slows, growth rates could cool considerably. Transformer demand is currently very strong, but investors should remember that industrial cycles eventually normalize.
#3 — Docebo Inc. (TSX: DCBO) — $29 CAD/share
Why Now
Docebo is one of Canada’s more overlooked AI-enabled software companies. As businesses increasingly automate employee training and onboarding, demand for learning management platforms continues to rise. The company has also been integrating AI tools directly into its platform, helping improve productivity and customer retention.
The Moat
Docebo’s moat comes from its sticky subscription-based software model. Once a company integrates a learning platform into HR and training systems, switching costs become meaningful. The company also has a growing international footprint, which helps diversify revenue away from Canada alone.
Financial Snapshot
Recurring revenue remains extremely strong, with healthy gross margins typical of SaaS businesses. The company has steadily improved profitability while maintaining double-digit revenue growth. Its balance sheet also remains relatively clean compared to many smaller technology peers.
One Key Risk
Competition in enterprise software is intense. Larger global software providers could pressure pricing or market share over time. Technology stocks also tend to react aggressively to slower growth guidance, even when the long-term business remains solid.
#2 — TerraVest Industries Inc. (TSX: TVK) — $128 CAD/share
Why Now
TerraVest Industries continues quietly compounding through acquisitions and infrastructure-related demand. The company operates across energy equipment, processing systems, and industrial manufacturing. As North American infrastructure and energy spending remains elevated, TerraVest continues benefiting from strong order activity.
The Moat
TerraVest’s moat is its decentralized acquisition strategy combined with niche industrial leadership. Management has consistently acquired smaller profitable businesses and integrated them effectively. That approach has created a diversified industrial platform with multiple revenue streams instead of relying on a single market.
Financial Snapshot
Revenue and EBITDA growth have remained impressive over the past several years. The company has also demonstrated strong cash-flow generation and disciplined capital allocation. Margins continue improving as acquired businesses scale more efficiently within the broader organization.
One Key Risk
Acquisition-driven companies always face integration risk. If management overpays for acquisitions or growth slows, investor sentiment could shift quickly. The stock is also less liquid than many larger TSX names, which can increase volatility.
#1 — MDA Space Ltd. (TSX: MDA) — $47 CAD/share
Why Now
MDA Space may be one of the most overlooked long-term growth stories in Canada right now. Governments and private companies are dramatically increasing spending on satellites, defense systems, and space infrastructure. The company’s backlog has continued expanding as demand for next-generation satellite technology grows globally.
The Moat
MDA’s moat comes from decades of aerospace expertise and highly specialized technology. The company has deep relationships with governments and major aerospace contractors, creating significant barriers to entry. Very few Canadian companies possess this level of advanced space and robotics capability.
Financial Snapshot
Revenue growth has accelerated alongside improving backlog visibility. The company also maintains relatively strong liquidity while continuing to invest heavily in future growth initiatives. Long-term contract structures provide more predictable revenue compared to many speculative technology companies.
One Key Risk
Execution risk remains important. Large aerospace contracts can face delays, cost overruns, or government spending changes. The space industry is also highly competitive globally, especially as U.S. firms continue expanding aggressively.
Final Thoughts
Mid-cap Canadian stocks can offer a powerful mix of growth and value when investors are willing to look beyond the usual blue-chip names. In 2026, several sectors — including AI infrastructure, electrification, industrial manufacturing, and aerospace technology — continue benefiting from major long-term investment trends.
The key for investors over the next 12 months will likely be focusing on companies with strong balance sheets, real cash flow generation, and durable competitive advantages instead of simply chasing hype. Many of these under-the-radar names still appear reasonably valued compared to their long-term growth potential, especially if interest rates continue trending lower and economic conditions stabilize further.
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