Every so often, several “Strong Buy” ratings pop up on investor screens, creating a buzz around certain stocks. While the attached 12-month price targets can be enticing, investors building wealth for the next decade need to look deeper. For long-term-oriented Canadian investors, the true test of which stocks to buy goes beyond what may drive a stock higher next quarter to check whether the business has the capacity to generate market-beating returns for years to come. Let’s examine three Canadian stocks currently commanding analyst optimism: Air Canada (TSX:AC), Neo Performance Materials (TSX:NEO), and Sigma Lithium (TSXV:SGML). You might be surprised to find out which “Strong Buy” stocks truly fit the bill for a long-term portfolio.
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Air Canada stock: Stuck in a holding pattern for the long haul?
Air Canada stock is a household name, but famous doesn’t always mean a fantastic long-term investment. My reservation stems from the fundamental economics of the airline stock.
Airlines operate with incredibly high fixed costs, which create a dangerous leverage effect; when revenues dip during an economic slowdown or a crisis, losses can pile up rapidly. Remember the government bailout during the pandemic? It wasn’t the first financial crisis for this economically vulnerable national airliner.
While a workers’ strike in 2025 has challenged operations, the bigger picture is Air Canada’s limited pricing power. It faces intense competition from budget carriers at home and giant international airlines abroad.
Air Canada stock has been range-bound since the pandemic (and before then) for good reasons. It’s best suited for short-term trades based on travel demand cycles. In my view, long-term-oriented investors seeking decades of compounding returns may be comfortable looking elsewhere for growth stocks to buy and hold for the next 10 years.
Neo Performance Materials: A North American magnet for growth
Shifting gears to a company with a powerful long-term thesis, we find Neo Performance Materials. An era of heightened trade tensions, geopolitical antagonism, and a global push to secure supply chains is upon us, and Neo stands out. It is the most integrated rare-earths magnetics company outside of Asia. Over 90% of the world’s permanent magnets, essential for everything from electric vehicles to wind turbines, currently come from China. Western industries are desperately seeking alternatives, and Canada-based Neo Performance Materials is perfectly positioned to fill that gap.
Neo’s recent financials are compelling. The company’s earnings, as measured by adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization — a handy gauge of core profitability), surged 42% year over year during the second quarter. Management is so confident that it raised its full-year profit guidance. With earnings per share up a staggering 92.9% in the first half of the year, a forward price-to-earnings ratio of 25.3 seems reasonable for such high growth. Add a modest 2.2% dividend and a management team actively buying back shares, and you have a stock with a credible path for growth well beyond 2025.
Sigma Lithium: Charging up for a decade of demand
Sigma Lithium stock presents a fascinating opportunity for investors with an appetite for the electric revolution. Lithium is a fundamental ingredient in lithium-ion batteries, and global demand for energy storage batteries is soaring. Sigma is one of the lowest-cost lithium-concentrate producers globally, averaging an all-in sustaining costs per tonne of US$594 per tonne during the past quarter, down 24% year-over-year.
When lithium prices hit a rough patch, as they did recently, high-cost producers suffer while low-cost leaders like Sigma survive and continue to invest.
A catchy fact: despite a downturn in lithium spot prices, Sigma realized a sales price of US$966 per tonne in August 2025, well above the market benchmark. The company has also brilliantly managed its operations, strategically building inventory during the second quarter’s price dip while cutting operating costs.
With clear sales visibility locked in through supply contracts extending through 2028, and a forward price-to-earnings-to-growth ratio of an incredibly low 0.1, Sigma Lithium stock appears significantly undervalued if you believe in the long-term renewable energy storage and electric-vehicle story.
The lithium stock’s recent 10.8% weekly jump might be just the beginning of a sustained recovery. It’s a buy for me, too.
