Canadian equity markets faced pressure last week amid concerns over elevated oil and natural gas prices and ongoing geopolitical tensions in the Middle East, with the S&P/TSX Composite Index declining 0.7%. Despite the pullback, the benchmark index remains up 6.7% year-to-date.
Although the broader outlook remains uncertain, I believe the following two stocks are well-positioned to outperform, supported by strong underlying businesses, favourable industry trends, and solid long-term growth prospects.
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5N Plus
5N Plus (TSX:VNP) manufactures specialty semiconductors and performance materials that serve a wide range of high-growth industries and applications, including renewable energy, aerospace, healthcare, and advanced electronics. The stock has surged 125.9% year-to-date, supported by strong quarterly results and growing exposure to the rapidly expanding terrestrial renewable energy market.
In its recently reported first-quarter results, the company’s revenue rose 32.6% year over year to $117.9 million. Higher sales volumes in its Specialty Semiconductors segment and favourable pricing for bismuth-based products within its Performance Materials business drove its topline growth. Supported by strong revenue growth and a 90-basis-point improvement in gross margin, net income increased 85.5% to $17.8 million. Meanwhile, diluted earnings per share (EPS) climbed 81.8% year over year to $0.20.
Looking ahead, demand for specialty semiconductors remains strong amid structural growth across key end markets, including terrestrial renewable energy and space solar power. With its expertise in ultra-high-purity semiconductor compounds, 5N Plus is well-positioned to capitalize on the expanding addressable market. In addition, the company is increasing solar cell production capacity at AZUR SPACE Solar Power GmbH by 25% this year to support growing demand.
The company has also secured a US$18.1 million grant from the U.S. government to expand germanium recycling and refining capabilities at its St. George, Utah, facility. This investment could strengthen supply chains for optics and solar germanium crystals while creating additional long-term growth opportunities.
At the same time, management continues to focus on productivity improvements and capacity-expansion initiatives to enhance operational efficiency and achieve economies of scale. Considering its strong financial momentum and multiple growth catalysts, I believe the rally in 5N Plus stock could continue, making it an attractive investment despite the uncertain macroeconomic backdrop.
MDA Space
Another stock that could outperform this year is MDA Space (TSX:MDA), which provides advanced technologies and services to the rapidly expanding global space industry. Supported by strong quarterly results and robust growth prospects, the stock has gained 95.7% year-to-date. In its recently reported first-quarter results, the company’s revenue rose 32.2% year over year to $464.1 million, driven by healthy volume growth across all three of its business segments.
In addition to strong topline growth, a 190-basis-point expansion in gross margin to 24.8% helped lift net income by 32% year over year to $50.7 million. Meanwhile, adjusted earnings per share (EPS) increased 26.7% to $0.38.
Looking ahead, the global space industry continues to expand amid rising demand for connectivity services, national security and defence programs, and renewed interest in space exploration. Reflecting these favourable trends, the World Economic Forum projects that the global space economy could grow at an annualized rate of 11% to reach $1.8 trillion by 2035, creating significant long-term growth opportunities for MDA Space. At the same time, the company has built a strong project pipeline worth approximately $40 billion over the next five years across government and commercial customers and multiple business areas.
To capitalize on rising demand, management plans to invest between $225 million and $275 million this year to strengthen production capabilities and advance chip development initiatives. Supported by these investments, the midpoint of management’s 2026 revenue and adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) expectations represent year-over-year growth of 10% and 7%, respectively. Given its expanding addressable market, strong execution, and ongoing growth initiatives, I believe MDA Space remains well-positioned to sustain its upward momentum, making it an attractive investment opportunity.
