It’s not just the well-known tech stocks that have been skyrocketing into the stratosphere in recent quarters. As the market rally begins to broaden out, I find some of the market’s best mid-cap stars could begin to attract a bit more attention from everyday retail investors.
Undoubtedly, sometimes, it’s the stocks you don’t hear about that can be the richest with value and long-term upside. So, as other investors look to play the obvious trade (the so-called Magnificent Seven stocks), it may pay dividends to take a step back and consider the more thinly traded stocks.
Remember, smaller-cap stocks tend to be somewhat less efficiently priced than the ones on everybody’s radar. Though I’m not against picking up shares of one of the Magnificent Seven members, I think investors striving to do better ought to give some attention to the impressive mid-cap plays as they look to grow their market share.
Without further ado, consider the following top-performing mid-cap Canadian stocks that I think can continue to deliver over the coming months and quarters, even if the Magnificent Seven trade looks to stumble from here.
Badger Infrastructure Solutions
Badger Infrastructure Solutions (TSX: BDGI) doesn’t just have an amusing name; its stock chart is also enough to catch the attention of upside-seeking investors. The firm is in the business of environmentally friendly, non-destructive hydrovac soil excavation (in short, it helps expose buried assets using pressurized water in a process called “daylighting”). Of late, business has been booming, especially with Badger’s energy and utility clients.
Year to date, BDGI stock is up around 25%. Over the past year, shares are up just shy of 60%. With a further breakout (shares are just making new highs) in sight, questions linger as to whether the newly awakened badger has more room to rally. I think it does.
The company’s gross margins have shown signs of improvement, and I think there’s more room to pad them, even as more demand comes online. After an incredible 2023, things are looking up for Badger. The company’s managers are faring well, and as demand continues to stay robust, my guess is Badger will remain one of the TSX mid-cap (market cap of $1.73 billion at writing) stocks to top.
At 30.4 times trailing price to earnings (P/E), shares don’t look cheap. But given the potential boom to be had in a cyclical upswing, I’d argue Badger remains a top contender for any long-term growth-focused fund. Badger is back. And it’s probably got more gas (or should I say water) in the tank.
Onex
Onex (TSX: ONEX) is another mid-cap stock we, as Canadians, should be talking about. Like Badger, shares of the investment manager have been off to the races in recent months. The stock rocketed to new heights before pulling back closer to $100 per share. I think the pullback is a great buying opportunity and a mere bump in the road on its upward trajectory.
For the fourth quarter (Q4), Onex saw profits slide a bit, but I wouldn’t rush to the exits just yet — not while its equity investments continue to pay off. Now down around 4% from its high, Onex looks like a mid-cap to watch closely as it looks to power higher. The stock is up around 64% in the past year. While the easy gains are in, I think more could be in the cards while shares go for just 11.2 times trailing P/E.
