Several Canadian stocks are set to be big beneficiaries of Canada’s infrastructure boom. Federal and provincial governments are investing billions in data centres, transportation, pipelines, utilities, energy, and defence. This is expected to trickle down to the Canadian economy and stimulate growth. Here are three top Canadian stocks set to thrive from this long-term trend.
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Calian Group: A top Canadian stock for the defence boom
Calian Group (TSX: CGY) may only have a market cap of $915 million. However, it serves a crucial place in Canada’s defence sector. It provides healthcare services, training, cyber, and satellite infrastructure to private enterprises and Canadian and NATO militaries.
As an entrenched provider, it is set to win more contracts as the Canadian military expands its staffing and equipment. Currently, the company is sitting with $1.5 billion of backlog. It just made acquisitions in the communications/connectivity space and healthcare.
Last quarter, revenue improved 18% and adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) increased 60%. Margins are improving, and business momentum appears to be accelerating.
This Canadian stock only trades for 18 times earnings. While it is not as cheap as it once was, it is still trading at a reasonable price compared to growth. This is a solid bet on Canada’s promise to hit its goal of 5% GDP spend on defence initiatives.
Cenovus: A top stock if pipelines are built
Cenovus Energy (TSX: CVE) is a bit of a second derivative play of the infrastructure boom. Suddenly, pipelines in Canada are back in vogue. With several pipelines being contemplated, interest in Canadian energy is starting to rise.
Cenovus is one of the top integrated energy providers in Canada. It both produces and refines energy.
It is set to exceed one million barrels per day of oil production in 2026. That production rate could rise considerably if it has tidewater access to sell its excess energy capacity. With the Middle East tied up in wars, Canada has a huge opportunity to become a crucial energy supplier to Asia.
If new energy infrastructure comes to fruition, Cenovus could enjoy a windfall as Canadian price differentials improve. Today, Cenovus stock trades at a discount to other integrated peers. As it continues to prove out its operating model, that difference should start to narrow, presenting investors with attractive upside.
Stantec: A top Canadian infrastructure development stock
Stantec (TSX: STN) is a little more of a direct play on the infrastructure boom. It provides engineering, design, and advisory services with specialization in water, environmental, buildings, and infrastructure.
Climate change and population growth are forcing municipalities and local governments to react more quickly to drastic weather changes. Stantec plays a major role in designing and building lasting systems that protect and adapt to these climate changes.
Stantec has a history of delivering good organic growth and making smart acquisitions. Its margin profile has been improving nicely over the past few years.
This Canadian stock is down on worries about AI disruption. While it is a concern, the company is also using AI to expand and speed up its services, while making its corporate structure more efficient.
Today, this Canadian stock trades for only 16 times earnings. Given its recent stock decline, it looks like an attractive time to make a position in Stantec.
