Canada’s defence spending is finally starting to catch up to that of its NATO peers. After several years of underfunding and underinvesting, Ottawa is finally pledging billions of dollars to bring its military and defence capabilities up to snuff.
From advanced aerospace systems to mission-critical manufacturing and cybersecurity, this spending boom could translate into years of contract wins and growing profits. Here are three Canadian stocks that look especially well-positioned to benefit as defence spending ramps up.
Source: Getty Images
A top Canadian defence stock
If I wanted to invest in this rising trend, Calian Group (TSX: CGY) would be one of the first companies to look at. It has a decades-long relationship with the Canadian military, providing healthcare, training, cybersecurity, and communication/satcom services.
Over 50% of its revenues come from defence services. Given the positive funding environment, Calian is likely to grow that segment both organically and by acquisition.
Calian just reported first-quarter 2026 results. Revenues were up nicely at 12% to $208 million, adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) rose 28% to $23 million, and it added $171 million to its backlog. It sits with a $1.4 billion backlog, or 1.75 years of revenue potential.
Even with the stock up 7% after earnings, its valuation is not demanding right now. There could be upside if it can hit its double-digit growth target in 2026.
A top Canadian space stock
MDA Space (TSX: MDA) is another stock set to surge from Canada’s rising defence program. MDA is a leading provider of satellites, space components, and geo-intelligence.
Despite a major lost contract in 2025, the company still has a substantial $4 billion backlog. It continues to make interesting contract announcements with several domestic and military applications (including with the U.S. military).
The fact is, there are not many companies that have MDA’s expertise and capabilities. Space is expected to be a new defence frontier, forcing many militaries to invest in protecting their communication and geo-intelligence networks.
MDA trades at a substantial discount to barely profitable space companies in the United States. However, MDA is profitable and cash generative. If you don’t mind a volatile stock, MDA could be a great defence bet today.
An essential services provider with defence applications
Exchange Income Corporation (TSX: EIF) is another stock positioned at the right place at the right time. It is a major player provider of air services to Canada’s north. Its flights are essential to these northern communities. Its services are often backed by predictable government contracts.
It also provides complex, specialized air surveillance systems. This includes a leading intelligence, surveillance, and reconnaissance software system. It has a couple of big potential contracts in the pipeline. If it wins them, Exchange could see a nice boost to its 2026 outlook.
Exchange is also a leader in environmental access solutions. With Canada starting to commit to several major nation-building projects, Exchange could see even further demand (it is already near max capacity).
Its stock is up 87% in the past year. Its valuation has nearly doubled. Yet, if it can hit or exceed its current double-digit growth targets in 2026, there could certainly be more upside for the stock.
