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.

| More on:
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

scientist monitors quantum computer
Tech Stocks

Quantum Computing Stocks Are Hot: Here’s a Canadian One to Buy Now

Explore the fascinating world of Quantum Computing and its potential to revolutionize technology and problem-solving.

Read more »

ETFs can contain investments such as stocks
Tech Stocks

Your TFSA Owns 3 ETFs: It May Still Be 1 Big Technology Bet

Three ETFs can still overlap heavily, leaving you with one big U.S. mega-cap tech bet instead of true diversification.

Read more »

young people stare at smartphones
Tech Stocks

Here’s a TFSA Stock Yielding 0.4% With Reliable Quarterly Payments

Apple (NASDAQ:AAPL) has a small dividend, but it's growing steadily. After a strong device showcase, perhaps the best spot for…

Read more »

The Meta Platforms logo displayed on a smartphone
Tech Stocks

1 Decision Today Could Change Your Financial Story

Contributing to and investing with your TFSA in names like Meta Platforms (NASDAQ:META) could change your long-term financial trajectory.

Read more »

Canadian dollars in a magnifying glass
Tech Stocks

BlackBerry Stock Is Up More Than 150%: Here’s the Number I’d Check Before Buying

BlackBerry’s huge 2026 rally has turned its turnaround into an AI-and-QNX growth story, but now it must prove it with…

Read more »

ETFs can contain investments such as stocks
Dividend Stocks

VFV Isn’t a Complete Portfolio: Here’s What Canadian Investors May Be Missing

VFV feels like a complete portfolio, but it’s really a concentrated bet on U.S. large caps and the U.S. dollar.

Read more »

Runner on the start line
Tech Stocks

2 Stocks I’d Buy for a Year-End Breakout

These two top Canadian growth stocks are delivering strong business growth, making their stocks worth watching as 2026 enters its…

Read more »

people apply for loan
Dividend Stocks

This Canadian Stock Could Be a Millionaire-Maker Without Becoming the Next Shopify

A million-dollar portfolio doesn’t require finding the next Shopify if you invest consistently and own profitable compounders like CGI.

Read more »