The simplest way to increase your chances of turning small investments into something big is by spotting value before the market does. Sometimes a company’s fundamentals are stronger than its current stock price suggests, and that gap between its performance and valuation can be an investor’s best friend.
When growth stocks get overlooked for a while, all it takes is a couple of strong quarters or a big announcement to bring them back into focus. This is exactly the moment patient investors wait for, and right now, two Canadian stocks look ready to make their next moves. In this article, I’ll highlight these two undervalued TSX-listed stocks that could be set for explosive upside as their earnings momentum and expansion plans continue to strengthen.
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MDA Space stock
First up is MDA Space (TSX:MDA), a rapidly growing Canadian aerospace player that seems to be redefining what “undervalued” really means. Although its shares have jumped nearly 75% over the last year, I still find it cheap based on its consistently improving long-term growth outlook. Currently, MDA stock trades near $36.06 per share with a market cap of about $4.5 billion.
The momentum in MDA stock picked up earlier this year after the firm delivered impressive second-quarter results. During the quarter, its revenue surged 54% YoY (year-over-year) to $373.3 million, driven mainly by a ramp-up in satellite projects under its Satellite Systems division. Its adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) for the quarter jumped 57% from a year ago to $76.3 million. Similarly, its net profit more than doubled to $48.1 million as its operating margins expanded in line with expectations.
Even after EchoStar’s recent decision to terminate its large constellation contract due to changes in U.S. spectrum plans, MDA maintained its full-year guidance, showing just how deep its order pipeline runs. Overall, the company’s backlog remains robust at $4.6 billion, excluding that project, providing clear visibility into revenue for the next few years.
More importantly, it recently won a new contract with Canada’s Department of National Defence to deliver enhanced space situational awareness (SDA) data services through advanced radar and satellite tracking technologies. With rising earnings, a strong balance sheet, and consistent contract wins, MDA Space looks like an explosive stock that could climb much higher once broader market attention catches up.
Aritzia stock
If MDA represents innovation beyond Earth, Aritzia (TSX: ATZ) seems to be building its own orbit in the world of fashion. ATZ stock has climbed more than 70% in the past year, now trading around $86 per share, with a market cap near $9.9 billion.
In the August quarter, Aritzia’s net revenue jumped 32% YoY to $812 million as its comparable sales climbed 21.6%. Strength in its U.S. business, where revenue grew 41%, continued to be the key driver of its financial growth. Meanwhile, its adjusted EBITDA jumped 122% YoY to $122.7 million. These figures clearly reflect the fashion retailer’s improving profitability with lower markdowns, savings on warehousing, and a stronger product mix.
Aritzia’s growth strategy is mainly focused on three factors — geographic expansion, digital growth, and brand awareness. It now operates 134 boutiques and continues to add new U.S. flagship locations. The company now expects its fiscal 2026 (which will end in February 2026) revenue to be between $3.30 billion and $3.35 billion, with adjusted EBITDA margins improving to 15.5%—16.5%.
Despite tariff-related headwinds, Aritzia’s strong execution, rising profitability, and expanding U.S. footprint make it one of the most promising growth stocks on the TSX today. The market may have already noticed, but given its solid earnings trajectory, there’s still big room for this stock to run in the long term. This growth potential makes it look undervalued.
