The Canadian mid-cap stocks are definitely worth a second look as we head into a new year that could see some of the strength in large caps begin to broaden out. Of course, we’ve seen glimmers of brilliance from some of the smaller-cap names throughout the year. And as the Bank of Canada (BoC) looks to make its next big move with regard to interest rates, perhaps a bit of a mid-cap rally could kick off at some point in the first half of next year.
Either way, valuations seem pretty reasonable with comeback stories that may very well lead to TSX-beating gains. As always, though, you should put in extra caution when it comes to those lower market cap stocks. While there’s way more growth ceiling to be had, there’s also potential for greater volatility and perhaps more downside risks in the face of a market crash or correction. Indeed, stocks could roll over in 2025 as many investors look to take gains after what’s been a rather profitable past two years.
Without further ado, let’s check out two mid-cap Canadian stocks with strong growth narratives and the ability to march higher from here. As always, the following names are best held over a long-term time horizon.
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Badger Infrastructure Solutions
First, we have Badger Infrastructure Solutions (TSX: BDGI), a highly underrated industrial firm that provides non-destructive soil excavation services to its customers. Undoubtedly, “daylighting” may not be an exciting growth business, but it’s a very necessary one, especially as firms look to make repairs on buried assets (think pipes and all the sort). The stock boasts a mere $1.34 billion market cap to go with a nice 1.85% dividend yield. At 23.1 times trailing price to earnings (P/E), shares also look way too cheap to pass up, especially given potential catalysts in the new year.
With Donald Trump to take to the White House in 2025, I’d look for Badger to experience an uptick in business. Indeed, whenever there’s a pick-up in infrastructure spending, demand for mobile soil excavation could really stand to take off. Personally, I don’t think such a Trump tailwind is baked into the stock just yet. Either way, Badger stands out as nothing short of promising after its latest pullback of more than 22%.
Cargojet
Up next, we have Cargojet (TSX: CJT) a cargo airline that’s felt severe turbulence in recent years. Though the stock appears to have bottomed out, I’d not look to jump into a position that is too large without a game plan. When it comes to such choppy mid-cap stocks, I’d prefer buying gradually on the way down. The stock may be able to gain ground if 2025 is a recovery year for the consumer.
Either way, there’s a nice 1.2% dividend yield to collect while you wait for the $1.8 billion firm to hit the ground running again. If you’re willing to endure short-term volatility for a shot at longer-term gains, it’s tough to overlook CJT right here, one of the growthiest Canadian mid-caps on the TSX Index that can and likely will experience tailwinds once the economy gets back up to speed.
