Most investors scanning the TSX for opportunity tend to chase the same handful of names. But some of the most compelling setups right now are hiding in plain sight. Two Canadian growth stocks, TerrAscend (TSX:TSND) and Aduro Clean Technologies (TSX:ACT), are each approaching pivotal moments in their respective industries.
If the next 12 months go the way management expects, early investors could be sitting on significant gains.
I think both companies are worth adding to your watchlist right now. Here is why.
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Is this Canadian cannabis stock a good buy?
While several Canadian cannabis stocks continue to underperform the broader markets, TSND has almost tripled returns over the last 12 months.
In Q1 2026, TerrAscend reported revenue of US$65.5 million, with gross margins of 52.8%. It reported an adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) of US$17.4 million, indicating a margin of 26.5% and free cash flow of US$7.8 million.
It was the 11th consecutive quarter in which TSND reported positive free cash flow and the 15th consecutive quarter of positive operating cash flow.
Executive Chairman Jason Wild pointed to a major industry catalyst on the call: the rescheduling of medical cannabis in the United States. Wild called it “a monumental inflection point” for the industry.
The immediate benefit is the elimination of the 280E tax burden on medical cannabis operations, which should help improve profit margins across TerrAscend’s portfolio.
President and Chief Executive Officer Ziad Ghanem was direct about where things stand: “I am more confident in our future than I have ever been.”
Analysts tracking TSND stock forecast free cash flow to expand from US$25.3 million in 2025 to US$64.4 million in 2028. If the cannabis stock is priced at 10 times forward FCF, it could triple again within the next 20 months.
The bull case for this small-cap Canadian stock
Valued at a market cap of $720 million, Aduro aims to disrupt the waste management industry. Aduro CEO and co-founder Ofer Vicus laid out the company’s progress in a recent investor presentation.
The core technology, which the company calls “chemolysis,” breaks down plastic waste and heavy crude oil into valuable products. Unlike the dominant competing approach, pyrolysis, Aduro’s process does not require hydrogen, tolerates contaminated feedstock, and operates at a smaller, more scalable unit size.
“Aduro is for the first time coming with a new approach,” Vicus told investors. He noted that competitors like Mura Technology, associated with Dow Chemical, and Quantafuel, previously tied to BASF, all rely on pyrolysis. Aduro is currently the only company offering a commercial alternative in the chemolysis space.
The world produces roughly 400 million tonnes of plastic waste annually, of which just 10% is recycled, which offers Aduro a massive long-term opportunity.
The company’s pilot facility in London, Ontario, is already running and generating positive early data. Aduro recently selected a site at Brightlands Chemelot, a major chemical hub in the Netherlands, to build its first industrial-scale unit, which could be operational within the next two years.
While the company is in the pre-revenue stage, analysts expect sales to surpass $60 million in fiscal 2030 (ending in May).
I believe Aduro is one of the most interesting speculative growth opportunities in Canada right now. The technology is differentiated, the balance sheet is clean, and the commercialization timeline is coming into focus.
The Foolish takeaway
Investors looking for Canadian growth stocks with real catalysts in the next 12 months should take a close look at both TerrAscend and Aduro Clean Technologies.
TSND offers a more mature, cash-generating business in a sector that could re-rate sharply on any positive regulatory news.
Aduro is moving fast toward a commercial breakthrough that could open up a market worth hundreds of billions of dollars.
Neither investment is risk-free. But long-term investors can generate substantial returns by identifying compelling business opportunities before the smart money kicks in.
