Investing in small-cap stocks is a solid long-term strategy to create wealth. These smaller companies often have significant room to grow, which means they can deliver much higher returns than their larger, more established peers. The trade-off, however, is that small-cap stocks carry a higher level of risk. Their prices can swing dramatically with shifts in market sentiment, making them more volatile than blue-chip stocks.
Therefore, it is crucial to look for companies with solid fundamentals, substantial growth potential, and effective management. When chosen carefully, small-cap stocks can be a rewarding part of a diversified portfolio.
With this background, here are two small-cap TSX stocks to buy right now.
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Small-cap stock #1: Bird Construction
Bird Construction (TSX:BDT) is a compelling small-cap TSX stock to consider now. This leading construction and maintenance company has exposure to all major domestic markets in Canada. Moreover, it has delivered solid financial results, which have given its share price a significant boost.
Over the past three years, its shares have surged by more than 356%. Moreover, its efforts to diversify operations, nationwide expansion, and effective risk management position it well to sustain the momentum in the coming quarters.
This small-cap company has a collaborative contracting approach, which spreads risks between the company and its clients. Its low- to medium-risk projects generate steady revenues and maintain resilient profits, even during uncertain market conditions. Bird Construction also focuses on essential sectors, including power, defence, and transportation infrastructure, enabling it to generate reliable earnings while positioning it to capture long-term growth trends.
Going ahead, its diversified operations, risk management, and robust project backlog provide a solid base for future growth. Bird maintains a healthy balance sheet, giving it the flexibility to invest in new opportunities. Furthermore, its focus on expanding its infrastructure capabilities and enhancing profitability bodes well for growth. Overall, Bird Construction appears well-positioned to deliver solid capital gains in the long run.
Small-cap stock #2: Ballard Power Systems
Ballard Power Systems (TSX:BLDP) is another compelling small-cap stock to consider now. The company is a leader in the design, manufacture, and servicing of proton exchange membrane (PEM) fuel cell products, a clean energy technology with applications across a wide range of markets. Ballard also provides services such as technology solutions, after-sales support, and training, strengthening its positioning in the hydrogen fuel cell ecosystem.
While the commercial adoption of fuel cell technology has been gradual and the number of large-scale contracts remains limited, Ballard’s stock has seen an impressive rally of roughly 163% over the past year. This surge reflects renewed optimism among investors, driven by the company’s ongoing restructuring initiatives aimed at reducing costs and streamlining its operations. By optimizing its product portfolio and focusing on high-potential segments, Ballard is positioning itself for a stronger and more sustainable growth trajectory.
Ballard’s disciplined approach to capital allocation and its rigorous cost-cutting measures are expected to bear fruit in the coming years. Management anticipates reducing annualized operating costs by about 30% by 2026 compared to the first half of 2025. This efficiency drive, combined with a focused product strategy, is projected to help Ballard achieve positive cash flow by 2027.
Strategically, Ballard is concentrating its resources on fuel cell products that demonstrate the strongest commercial traction while winding down non-core initiatives. The company is also investing heavily in next-generation stack technology and system cost reduction to offer higher-margin products.
Looking ahead, Ballard Power stands to benefit from the accelerating global shift toward low-carbon energy solutions. Moreover, Ballard’s investments in advanced manufacturing capabilities position it favorably to capitalize on the clean energy transition.
