Canada’s Defence Spending Boom: 3 Stocks Poised to Win Big

Canada has a wave of defence spending coming. Here are three top stocks poised to win big from this new trend.

Key Points
  • Canada’s big defence and infrastructure spending ramp (>$50B in 2026; 5% of GDP by 2035 target) creates a multiyear tailwind for domestic defence and space suppliers.
  • Top Canadian plays: Kraken Robotics (TSXV:PNG) — high‑growth but volatile after acquisition/financing; Firan Technologies (TSX:FTG) — small‑cap aerospace supplier with ~$60M backlog and mid‑teens growth; MDA (TSX:MDA) — space systems leader with ~ $4B backlog.
  • These stocks offer outsized upside to the spending boom but carry execution, valuation and volatility risks — size positions carefully and prefer buying on pullbacks.

After years of underinvestment, Canada is now taking its defence responsibilities and NATO obligations seriously. The Canadian government has committed to increase its defence spending budget to 5% of gross domestic product (GDP) by 2035.

Recently, it announced that it hit its NATO target of 2% of GDP earlier this year. In the 2026/2027 budget, Canada is projected to spend over $50 billion on defence.

All this to say that Canada is on a defence and infrastructure spending boom. This spending will start to trickle through the economy, and several Canadian stocks could be set to win. Here are three top Canadian defence stocks that are poised to win big in 2026 and the years beyond.

Piggy bank on a flying rocket

Source: Getty Images

Kraken Robotic: A top defence growth stock

Kraken Robotics (TSXV: PNG) should continue to benefit from a rise in global defence spending. It offers subsea sensors, batteries, and robotic systems. Ocean battlefields are being transformed using drones and remotely operated vehicles. Kraken’s components play perfectly into this trend.

Now, that is clearly reflected in the stock performance. PNG stock is up 1,134% in the past five years! However, the business is really starting to chug. Revenues have grown by a 23% compounded annual growth rate (CAGR) in the past three years. Adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) have compounded by a 33% annual rate.

This Canadian stock has recently pulled back on news of a major acquisition and equity financing. It is by no means a cheap stock. However, if you want exposure to an exciting, growing defence theme, this is one stock to buy.

Firan Technologies: A top small-cap defence stock

Firan Technologies (TSX: FTG) is a small-cap stock to play growth in defence spending. It has a market cap of $506 million. Like Kraken, it has delivered great returns for shareholders. Its stock is up 779% in the past five years.

Firan supplies essential (but boring) aerospace components like cockpit assemblies/panels, circuit boards, sensors, and antennas. In fact, it supplied switch interface panels on the NASA Artemis spacecraft.

The aerospace supplier has a $60 million backlog that should support mid-teens growth in 2026. With a strong balance sheet, acquisitions could be a booster to that forecast.

MDA: A top space stock

MDA Space (TSX: MDA) is one of the only stocks you will find in Canada with exposure to the space economy. With a market cap of $6 billion, it is a global provider of satellites, space robotics, and geointelligence services.

Space is an increasingly relevant sector of defence. Humans are reliant on satellites for communication, data, and earth tracking. Yet, it could become a battlefield in the future. MDA has the expertise to provide solutions in this area.

MDA has a $4 billion backlog. While it is only projecting 10% revenue growth in 2026, that comes after a year where revenues grew 51%. This stock can be very volatile, so it is best to add it on a pullback.

The Foolish takeaway

Compared to Europe and the U.S., Canadian stocks provide limited exposure to the defence sector. However, the few that do exist could enjoy outsized performance in the years to come. Some other defence stocks to contemplate include Calian Group, Exchange Income Corp., Magellan Aerospace, and CAE.

Fool contributor Robin Brown has positions in Calian Group, Firan Technology Group, and MDA Space. The Motley Fool has positions in and recommends Firan Technology Group and Kraken Robotics. The Motley Fool recommends Calian Group and MDA Space. The Motley Fool has a disclosure policy.

More on Tech Stocks

telehealth stocks
Tech Stocks

1 Canadian Stock Down 42% to Buy and Hold Forever

This health tech stock is trading at a discount as it continues to grow and expand a business very much…

Read more »

space ship model takes off
Tech Stocks

Ottawa’s Defence Spending Boom: This Canadian Tech Stock is Already Cashing In

MDA has identifiable government and defence work, but its backlog and profit margins reveal more than the spending headlines.

Read more »

Printing canadian dollar bills on a print machine
Tech Stocks

I’d Keep Shopify for its 18% Free Cash Flow Margin

With an expanding 18% free cash flow margin and massive share buybacks, Shopify proves why it remains a top TSX…

Read more »

quantum computing is still in infancy
Tech Stocks

A Quantum Computing Stock Canadian Investors Can Buy Now

Looking for a quantum computing stock? D-Wave offers exposure to an emerging industry, with paying customers and plenty still to…

Read more »

ETF is short for exchange traded fund, a popular investment choice for Canadians
Tech Stocks

A Handful of Tech Giants Is Carrying Wall Street: Canadians Holding U.S. Index ETFs Should Know How Concentrated They Really Are

XQQ's top 10 holdings make up 46% of the fund. See how concentrated Canada's Nasdaq 100 ETF is and why…

Read more »

man makes the timeout gesture with his hands
Dividend Stocks

Why Dividend Cuts Happen and How to Spot the Warning Signs

Learn why dividend cuts happen and how to spot warning signs, using BCE and TELUS to examine cash flow, debt,…

Read more »

The letters AI glowing on a circuit board processor.
Tech Stocks

Nvidia Just Hit $5.8 Trillion: The Canadian Stock Riding the Same AI Wave

Celestica’s AI exposure is supported by operating results, while cash investment and valuation make the buying decision more demanding.

Read more »

man in bowtie poses with abacus
Tech Stocks

A Simple Way to Estimate Your Retirement Number

Here's how Canadian couples can calculate their retirement number in 2026.

Read more »