At the Canada Investment Summit, Prime Minister Mark Carney said the country is undertaking its biggest increase in defence spending since the Second World War. Ottawa’s Defence Industrial Strategy is expected to help catalyze roughly $500 billion of investment over the next decade.
The opportunity stretches far beyond buying more fighter jets. Carney specifically highlighted Canadian strengths in aerospace, shipbuilding, artificial intelligence (AI), cybersecurity, quantum computing, robotics and autonomous systems.
Then the summit’s defence panel explained why this cycle could be much bigger than Canada alone.
Source: Getty Images
Why this defence cycle is different
CAE Chief Executive Officer Matthew Bromberg described what allied countries are experiencing as a “once-in-a-generation increase in defence spending.”
His argument wasn’t simply that governments intend to spend more. They also need to recruit, equip and train millions more personnel while replacing aging equipment and adapting to warfare increasingly dependent on satellites, drones, software and data.
That creates an opportunity for Canadian companies already selling into allied markets. Bromberg summed up Canada’s advantage rather neatly.
“Trust and technology is what Canada brings to the future of defence.”
That word, trust, appeared throughout the summit. Governments increasingly want critical defence technology supplied by countries and companies they can rely on. For investors, that makes MDA Space (TSX: MDA) particularly interesting.
Why I’d buy MDA Space
MDA develops satellites, robotics and geo intelligence technologies. That may sound considerably more Buzz Lightyear than traditional defence, but modern militaries rely heavily on space.
Satellites provide communications, Earth observation and surveillance. Governments also need to know what’s orbiting above them and whether critical space infrastructure faces threats. MDA is already benefiting from all of it.
In March, Canada’s Defence Investment Agency awarded the company a roughly $32 million contract to provide three ground-based observatories used to detect and track objects in space. Canada has also awarded MDA a $688 million contract for a replacement radar satellite that will strengthen sovereign Earth-observation capabilities. Those aren’t hypothetical summit opportunities. They’re signed contracts.
The business is growing quickly
Second-quarter revenue surged 34% year over year to $499 million. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) climbed 26% to $96 million, while backlog finished the quarter at $4 billion. Better yet, backlog actually increased $310 million from the previous quarter as new bookings outpaced the work MDA completed.
That’s the figure I’d watch. A $4 billion backlog gives MDA considerable visibility while Canada and its allies prepare to pour more money into defence, satellite communications and sovereign infrastructure. Management also increased the midpoint of its 2026 revenue and adjusted EBITDA guidance following the quarter.
What’s more, MDA recently traded around $42.41, roughly 38% below its 52-week high of $67.90. At about 28 times forward earnings, the shares aren’t cheap. Investors are still paying for substantial future growth. That said, cash flow is another risk. Second-quarter free cash flow was negative $150 million as MDA invested in expansion and dealt with working-capital swings on major contracts. Government procurement can also move at a pace that makes continental drift look energetic.
Bottom line
Still, the defence opportunity extends well beyond one Canadian budget. The summit’s aerospace and defence executives argued that allied countries increasingly need interoperable aircraft, satellites, communications and surveillance systems from trusted partners.
Canada already has the technology. MDA is already selling it. If defence spending really is entering a once-in-a-generation cycle, this could be one Canadian stock with considerably more runway ahead.
