Canadian investors looking to generate market-beating returns should consider gaining exposure to high-quality growth stocks trading at reasonable valuations. In this article, I have identified two top Canadian stocks well-positioned to deliver outsized gains in 2026 and beyond.
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Is this Canadian stock a good buy?
Valued at a market cap of $1.9 billion, Pet Valu (TSX:PET) stock is down 27% below all-time highs. Pet Valu Holdings operates a retail and wholesale pet supply business across Canada through owned and franchise stores. The company sells pet food, treats, toys, health products, and accessories for dogs, cats, fish, birds, reptiles, and small animals under various brands. It also offers in-store services, including grooming salons and self-serve dog washes, as well as live animal sales and online shopping.
In the third quarter (Q3) of 2025, the pet retailer reported system-wide sales growth of 4% driven by higher same-store sales and the expansion of its store network. Its revenue rose by 5% year over year due to higher wholesale penetration with franchises.
Pet Valu opened 16 new stores in Q3, bringing its total to 849 locations. In the first nine months of 2025, it opened 26 stores and is on track to open 40 stores in 2025. The pet food retailer also renovated, expanded, or relocated 72 locations, most of which were part of its enhanced culinary experience rollout.
Same-store sales grew 2.3% in the quarter, similar to the pace seen in Q2 and supported by growth in both basket size and transaction counts.
It reported an adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) of $64 million, indicating a margin of 22%. Pet Valu achieved a key milestone by delivering year-over-year leverage in consolidated distribution costs as it began to lap the step-up in fixed costs from its new distribution centres.
This marks the beginning of what management expects to be many years of distribution cost leverage following the completion of its supply chain transformation.
Pet Valu wrapped up its supply chain overhaul in Q3, commissioning its new Calgary distribution center in July. The company now operates over 1.3 million square feet of modern, partially automated distribution capacity across Canada, positioning it to support growth for the next decade.
Analysts tracking the Canadian stock forecast revenue to increase from $1.1 billion in 2024 to $1.7 billion in 2029. In this period, its free cash flow (FCF) is forecast to improve from $102.6 billion to $181 billion. If the TSX stock is priced at 15 times forward FCF, which is reasonable, it should gain over 40% in the next three years.
Is this Canadian tech stock undervalued?
Down 35% from all-time highs, Descartes Systems (TSX:DSG) provides cloud-based logistics technology solutions globally. Its platform offers modular tools for routing, transportation management, e-commerce fulfillment, customs compliance, and global trade intelligence.
The company serves transportation providers, logistics service providers, and distribution-intensive companies through subscription-based software-as-a-service solutions.
Analysts tracking Descartes stock forecast revenue to increase from US$651 million in fiscal 2025 (ended in January) to US$1.08 billion in fiscal 2030. In this period, FCF is projected to improve from US$212.5 million to US$437 million.
If the TSX tech stock is priced at 25 times forward FCF, which is below its 10-year historical average, it should return over 55% in the next three years.
