The Canadian benchmark index performed well in 2024, ending the year with approximately 18% growth. Further, lower interest rates, investments in artificial intelligence (AI) infrastructure, and increasing demand for power and energy could continue to push the equity market higher in 2025. So, if I could only buy three Canadian stocks in 2025, here are my top picks with solid fundamentals and strong growth potential.
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TSX stock #1
My first stock is Hammond Power Solutions (TSX: HPS.A). Despite the significant rise in its share price, Hammond remains a compelling investment due to its strategic positioning in the power solutions market. The company manufactures dry-type transformers and power quality products, with solid demand from sectors such as data centers, healthcare, public infrastructure, electric vehicle charging, utilities, and mining.
This demand trend will likely remain solid in 2025, driven by the ongoing electrification of vehicles, infrastructure investments, and the need for more power and data. Hammond is also expanding its capacity to meet rising demand, which is further supported by a growing backlog, ensuring a strong revenue pipeline for the coming years.
Additionally, Hammond’s recent acquisition of Micron Industries expands its market reach, enhancing growth potential in power quality and original equipment manufacturers (OEM) products. Overall, with a positive outlook in the power and data infrastructure sectors and potential gains from the commercial construction and industrial markets, Hammond Power Solutions is well-positioned for significant growth in 2025.
TSX stock #2
goeasy (TSX: GSY) is another compelling stock to buy now. This leading non-prime consumer lender is set to benefit from a lower interest rate environment, which could fuel higher loan demand and drive its financials.
goeasy sports a stellar revenue and earnings growth rate, offers a high return on equity (ROE), and consistently increases its dividend. These attributes make it a compelling long-term bet. Over the past five years, goeasy’s top line has grown at a compound annual growth rate (CAGR) of 20.2%, with earnings increasing at a CAGR of 28.7%. This momentum in goeasy’s business will likely be sustained, driven by higher loan originations and expansion of its consumer loan portfolio.
Further, this financial services company’s focus on higher-quality loan originations, solid credit and payments performance, and operating efficiency could lead to double-digit earnings growth. Thanks to its growing earnings base, goeasy could continue to enhance its shareholders’ value through higher payouts in 2025 and beyond.
TSX stock #3
Celestica (TSX: CLS) presents a compelling investment opportunity to capitalize on the accelerated investments in AI infrastructure. It provides electronics manufacturing, hardware platform development, and supply chain solutions. The company is witnessing strong demand in its Connectivity & Cloud Solutions (CCS) business, which serves sectors like communications and enterprise (servers and storage).
Celestica’s hardware platform solutions (HPS) business is witnessing robust growth, driven by solid demand for its 400G networking switches. Moreover, the ramping of 800G switches augurs well for future growth.
With solid revenue growth and margin expansion, Celestica will likely outperform the Canadian benchmark index in 2025. The company is investing in modular AI/ML systems and customizable AI silicon and is poised to benefit from AI infrastructure investments.
Additionally, its Advanced Technology Solutions (ATS) business, focused on aerospace, defence, and industrial markets, is set for a rebound. With positive outlooks across AI, defence, and industrial sectors, Celestica is positioned for sustained growth in 2025, making it an attractive investment.
