The market can ignore a growth story for months, then suddenly discover transformers or satellites after one enthusiastic earnings call. That’s the fun, and occasionally the nausea, of owning smaller Canadian growth stocks.
The biggest moves usually occur when investors must raise their earnings expectations. A larger backlog, improving margins, a major contract, acquisition, or capacity expansion can make yesterday’s valuation look considerably less ridiculous.
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Growth areas
Artificial intelligence (AI) provides one such opportunity (duh). Data centres require more than clever chips. Electricity must be transformed, controlled, protected, and delivered without accidentally turning extremely expensive equipment into toast.
Defence and space spending offer another. Satellite contracts can create years of revenue, while acquisitions may add technology and customers much faster than internal development. Investors should still demand evidence through sales, backlog, and cash flow before buying the story.
The remaining months of 2026 will provide plenty of that evidence. Two Canadian growth stocks have upcoming results and major expansions capable of changing expectations again.
HPS
Hammond Power Solutions (TSX: HPS.A) provides the electrical-infrastructure opportunity. The company manufactures dry-type transformers, reactors, filters, and power-quality products used in data centres, renewable energy, mining, manufacturing, and commercial infrastructure.
First-quarter sales jumped 31.5% to a record $264.8 million, helped by custom products and data-centre activity in the United States and Mexico. Even after shipping that record volume, Hammond finished the quarter with a backlog 94.6% larger than one year earlier.
That backlog already provides considerable visibility, yet the larger second-half catalyst arrived June 29. Hammond completed its $365 million acquisition of AEG Power Solutions, a European power-electronics company that generated approximately $326 million of revenue during 2025.
AEG adds industrial uninterruptible power supplies, power conversion, global manufacturing, and recurring aftermarket services. Hammond expects the purchase to increase adjusted earnings per share (EPS) during the first full year, although investors must wait until later quarters to see whether integration behaves itself.
Second-quarter results arrive July 30. The AEG deal closed after that quarter ended, but another backlog increase or encouraging integration outlook could move the shares. At approximately $292, however, Hammond trades around 53 times trailing earnings. Integration trouble, new debt, weaker data-centre demand, or disappointing margins could make that valuation considerably less charming.
MDA
MDA Space (TSX: MDA) offers the more explosive opportunity. The shares recently traded at $44.75, approximately 34% below their 52-week high. MDA stock builds satellites, robotics, Earth-observation systems, and other technology for commercial and government space missions. So still a strong and growing area only getting stronger with the use of AI.
First-quarter revenue climbed 32% to $464.1 million, while its $3.7 billion backlog provides several years of work. A newly awarded $688 million Canadian radar-satellite contract should enter that backlog during the second quarter, giving investors something substantial to watch when results arrive August 7.
MDA’s proposed US$620 million acquisition of Blue Canyon Technologies provides another possible boost. Expected to close before year-end, the deal would add U.S. defence customers, satellite-manufacturing capacity, and approximately US$3.5 billion to MDA’s opportunity pipeline.
MDA stock trades around four times the midpoint of 2026 revenue guidance. That valuation assumes considerable growth, while capital spending, acquisition integration, customer concentration, and recent shareholder dilution introduce very real risks.
Bottom line
Neither stock belongs in the money needed next year jar. Investors buying stocks in Canada could start with smaller positions and leave room for the inevitable wobble. If Hammond converts its enormous backlog while successfully absorbing AEG, and MDA stock keeps transforming contracts into profitable revenue, both companies could give 2026 a considerably more exciting final act.
