Investing in fundamentally strong stocks that trade at an attractive multiple is a solid strategy to generate market-beating returns over time. Canadians should consider adding quality, undervalued stocks that are poised to grow revenue and earnings at a steady pace to derive outsized gains.
One such mid-cap TSX stock is MDA Space (TSX:MDA), which is down 52% from all-time highs. Valued at a market cap of almost $3 billion, MDA Space provides advanced space technology solutions globally, specializing in three core areas.
- It delivers geospatial intelligence through satellite imagery for national security, climate monitoring, and maritime surveillance, including the operation of its RADARSAT-2 satellite.
- It develops autonomous robotics, sensors, and control systems for space missions and planetary exploration.
- MDA also builds satellite systems and subsystems for communication networks, supporting broadband internet, direct-to-device connectivity, and low-earth orbit constellations.
The Canadian company serves government agencies, contractors, and clients in the space industry worldwide. Despite the ongoing pullback, the TSX stock has more than tripled investor returns over the last three years.
Alternatively, MDA stock went public in April 2021 and is up “just” 21% since its initial public offering.
The bull case of investing in this TSX tech stock
In Q3 2025, MDA Space reported revenue of $410 million, an increase of 45% year over year, while adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) rose 49% to $83 million, indicating a margin of 20%.
The Canadian space technology company maintained its full-year outlook despite recent contract setbacks. At the midpoint estimate, MDA Space forecasts 2025 revenue of $1.6 billion, representing a 48% year-over-year increase. The company ended the quarter with a backlog of $4.4 billion, which provides top-line visibility through 2026 and beyond.
In Q3, MDA Space completed its acquisition of SatixFy Communications, adding next-generation satellite communication technology to its portfolio. However, the highly publicized EchoStar contract, worth approximately $1.3 billion, was terminated by mutual agreement in September.
MDA Space expects full compensation for termination costs and fees, and management emphasized the cancellation had nothing to do with the company’s performance or technology capabilities.
Customer demand for MDA’s space technology remains robust across all three business segments. The Satellite Systems division generated $284 million in revenue, up 69% from last year, driven by work on the Telesat Lightspeed program and Globalstar’s next-generation constellation.
MDA is making solid progress expanding its Montreal facility, which will become the world’s largest high-volume satellite manufacturing site in its class with the capacity to produce two digital satellites per day.
MDA also faces some operational headwinds as delays from suppliers pushed back the delivery of nine Globalstar satellites to early 2026. Similarly, supply chain issues delayed the MDA CHORUS constellation launch to late 2026. The company noted it has back-to-back liquidated damage clauses with suppliers to provide recourse for delays.
Is MDA stock undervalued?
Looking ahead, MDA sees growing opportunities in defence spending as NATO countries increase investments in space capabilities. MDA maintains a $20-billion opportunity pipeline over the next five years, with $13 billion tied to its satellite systems business.
The management expects to end 2025 with a positive free cash flow while continuing to invest in growth initiatives. Analysts forecast that MDA Space’s revenue will increase from $1.6 billion in 2025 to $2 billion in 2027. In this period, adjusted earnings are forecast to expand from $1.47 per share to $1.77 per share.
If the TSX stock is priced at 18.5 times forward earnings, which is in line with its three-year average, it should trade around 45% over the next 15 months.
