Canadian investors love investing in the familiar. We go to the biggest names in Big Six banks, energy, and utilities when we want Canadian stocks to invest in long term. But guess what, everyone else is doing that too! This can lead to an inflated share price, and could mean slow growth or even pullbacks in share price.
In light of this, it’s important to diversify and think outside the box, looking lower than the top of the market cap ladder to find serious growth stories bubbling up from mid- or even small-cap tiers. So today, we’re going to look at two opportunities in Canadian stocks you might have missed while focusing on the big name brands.
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CVO
Coveo Solutions (TSX:CVO) is a software company focusing on artificial intelligence (AI), search, relevance, and personalization solutions. Basically, these tools help enterprises deliver the most relevant online experiences. However, many may have missed out on the AI stock because of its niche focus.
Even so, CVO has been making some moves that have analysts sitting up to pay attention. The Canadian stock emphasized its AI and generative AI capabilities to learn what many see as the next wave in enterprise software. In fact, the company recently offered forward guidance that signalled management is trying to guide the transition rather than leave it open to others to decipher.
Right now, analysts predict upside at current levels of around 25%. If the Canadian stock can convert its AI positioning into stronger and accelerating recurring revenue growth from its software-as-a-service (SaaS) position, the valuation could expand significantly. Cost control and innovation will need to be a part of this. This can come with risks, but it’s certainly now a Canadian stock investors should keep on their watchlist.
GDI
Then we have GDI Integrated Facility Services (TSX:GDI), a compound story that may not be flashy, but is no less exciting. The Canadian stock runs large-scale janitorial, facilities management, and technical services across North America. It self-performs much of the work, creating bundles of recurring contracts to target efficiency and drive margins. Whether it’s HVAC maintenance or healthcare cleaning services, the company covers it.
The second quarter of 2025 could be why some investors are thinking twice about the stock, with GDI operating at a net loss. However, management is still positive about the outlook. The business overall is performing well, generating higher than historic profitability, according to management.
The Canadian stock now has a buyback program for investors to drool over, as well as a stable outlook. Facilities services don’t trend, but aren’t too cyclical either. Wage inflation pressures or accounting line items can make near-term prints look noisy. However, in the longer term, the core model is contract-backed and diversified. So we’re looking at an investment that’s years, not months.
Bottom line
Sometimes we get too focused on the top of the ladder and forget that there are other steps to take to get there. When it comes to these two Canadian stocks, they could be ladder rungs that provide the building blocks for some of your greatest portfolio performers.
