The Canadian stock market delivered an impressive performance in 2024, with the benchmark index climbing around 18%. As for 2025, there are reasons to believe this upward momentum could continue. Factors such as a lower interest rate environment, rising demand for power and energy, and ongoing investments in artificial intelligence (AI) infrastructure are expected to push stocks higher. Against this background, here are my top two Canadian stocks with solid fundamentals that are set for success.
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Hammond Power Solutions
Hammond Power Solutions (TSX: HPS.A) is a leading dry-type transformers and power quality products manufacturer. The company is witnessing strong demand for its custom products from emerging sectors like data centres. Thanks to this momentum, Hammond Power Solutions stock gained over 58% in 2024 and is up over 1,024% in three years.
Despite this notable jump in share price, Hammond Power Solutions will likely benefit from the increasing activity in sectors such as data centres, healthcare, and infrastructure. Moreover, its focus on expanding capacity positions it well to capitalize on higher demand. Additionally, Hammond’s backlog has been growing steadily, reflecting strong booking momentum. This backlog provides a solid foundation for sustained revenue growth in the coming years.
Hammond Power Solutions is well-positioned to benefit from the continued electrification of power systems, the reshoring of manufacturing to North America, and increased investment in infrastructure. The global demand for power and data will support the company’s growth.
Further, the acquisition of Micron Industries broadens its reach. It opens doors to a diverse set of original equipment manufacturers (OEM), paving the way for incremental growth in power quality and related products.
Overall, Hammond Power Solutions is poised to deliver solid growth in 2025, driven by power and data infrastructure demand. Further, a rebound in commercial construction and industrial markets could accelerate its growth rate and support its share price.
Celestica
Celestica (TSX: CLS) manufactures electronics, develops hardware platforms, and provides supply chain solutions. The company is witnessing strong demand in its Connectivity & Cloud Solutions (CCS) business, which includes its Communications and Enterprise (servers and storage) end markets. Further, continued investment in data centre infrastructure, with robust demand for networking switches within Celestica’s hardware platform solutions (HPS) portfolio, supports its growth.
Thanks to this solid demand, Celestica stock jumped about 242% in 2024, significantly outperforming the broader markets. Moreover, solid revenue growth and improvements contributed to a healthy margin expansion.
Celestica is poised to benefit from ongoing investments in AI infrastructure in 2025. The company is investing in modular AI/ML systems and rack-scale solutions, with a focus on customizable AI silicon, which augurs well for long-term growth.
Beyond the AI boom, Celestica is set to benefit from a rebound in its Advanced Technology Solutions (ATS) business, which serves the aerospace, defence, and industrial markets. Further, the company’s management remains optimistic about its Industrial and Smart Energy segments and expects a return to growth in 2025.
With favourable trends across AI and defence spending, Celestica is poised for continued growth in 2025.
