Hammond Power Solutions (TSX: HPS.A) has been one of the standout growth stocks on the Toronto Stock Exchange lately. It generated an extraordinary 625% return over three years, leading to its inclusion on the 2026 TSX30 ranking. The fast-growing manufacturer of dry-type electricity transformers and power quality equipment has capitalized directly on the secular tailwinds of grid electrification and the artificial intelligence (AI) data centre investment boom. As the company prepares to report its third-quarter earnings, probably next week on October 27 (unconfirmed), long-term investors should keep a close watch on one critical operational health indicator: its order backlog.

Strong regional performance driving surging orders

By the end of the second quarter of 2026, Hammond Power’s order backlog was 96.9% higher than it was at the end of the second quarter of 2025. This massive year-over-year surge underscores relentless market demand across North America, led by its U.S. and Mexico geographical segment where quarterly revenue surged 73% year-over-year.

Chief Executive Officer Adrian Thomas noted that demand continues to be propelled by heavy data centre buildouts, power infrastructure upgrades, and industrial electrification. Although Canadian sales fell 23.7% due to project timing and broader market softness, strong U.S. execution lifted overall consolidated revenue by 44.7% year-over-year.

Momentum remains strong, overall.

How Hammond Power reports its backlog metric

Backlog is a precursor to future revenue. At Hammond Power, backlog represents “all unfinished customer orders”. To deeply understand Hammond Power’s backlog, investors must evaluate how management communicates this metric.

Unlike many industrial capital goods manufacturers, HPS does not publish absolute dollar figures for its order backlog in its financial statements. Instead, management reports backlog movement strictly as relative percentage shifts alongside qualitative commentary. That’s understandable, as customers may cancel or alter orders any time, especially when shipping dates aren’t confirmed. And customers for such capital equipment often aren’t so sure about such dates at order placement. So its ok to be conservative about the hard numbers.

However, since Hammond Power’s exact backlog dollars remain proprietary, Bay Street often evaluates Hammond Power’s demand trajectory by comparing sales growth against the company’s annualized manufacturing capacity, which management has been expanding toward the $1.2 billion mark. This capacity recently expanded in September.

Similarly, while balance sheet disclosures show contract liabilities; representing customer prepayments and deposits (deferred revenue) rising to $10.3 million at the end of the second quarter, up from $5.9 million at year-end 2025; this accounting measure reflects only a narrow fraction of total unfulfilled customer commitments.

Hammond Power Solutions Backlog growth rates

Understanding HPS stock’s sequential contraction versus long-term demand

Heading into next week’s third-quarter earnings release, investor concerns center on whether the backlog will expand further or continue a slight sequential contraction noted in June.

On a quarter-over-quarter basis, the second-quarter 2026 backlog dipped 6.9% from the first quarter and contracted by 3.1% from December 2025 year-end levels as record quarterly shipments exceeded new order bookings.

Rather than indicating an operational slowdown, this minor sequential decline demonstrates the company’s continued success in converting unfulfilled orders into recognized revenue. Following management’s September 22 announcement regarding expanded manufacturing capacity across North America, Hammond Power can now process custom transformer orders faster, reducing customer lead times and improving fulfillment efficiency.

The strategic investment question for the third quarter is how this added production capacity impacts backlog dynamics over the coming quarters.

On one hand, faster manufacturing throughput accelerates backlog conversion into revenue, which could naturally pull down total backlog levels if order intake remains static. On the other hand, expanded capacity may allow major data centre operators and utility customers to place even larger bulk orders, knowing that Hammond Power can meet tighter delivery schedules. If order intake adjusts upward to match this higher capacity, the business could establish a new, higher equilibrium of recurring order flow.

Investor takeaway

With its recent margin expansion supported by pricing power and a favourable custom product mix, Hammond Power stock is facing its third-quarter earnings release from a position of operational strength. Watching how management balances rapid order conversion against fresh booking momentum on October 27 (unconfirmed date) will offer the clearest window into the stock’s next growth leg.

The post I’m Watching Hammond Power’s Backlog, Now Nearly Double Last Year’s appeared first on The Motley Fool Canada.

More reading

• I’m Betting on Hammond Power After a 45% Sales Jump
• AI Needs More Than Chips: These Canadian Stocks Have Something it Needs
• Hammond Power Solutions Stock Rides the Grid Electrification Boom to a 625% Gain
• Hammond Power Solutions Stock Could Cash in Big on the Data Centre Boom
• TSX Today: What to Watch for in Stocks on Wednesday, September 23

Fool contributor Brian Paradza has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Hammond Power Solutions. The Motley Fool has a disclosure policy.

It’s easy to assume that a falling stock must mean something is badly wrong with the company. Sometimes that’s true. Sometimes it’s not. CGI (TSX: GIB.A) could be a good example of why investors should not judge a stock by looking at its recent share price movement.

Although CGI stock has lost a lot of ground over the last year, the company is still making money, producing strong cash flow, and building a large book of future business. At the same time, it’s also expanding into newer areas such as artificial intelligence (AI) and quantum computing instead of simply relying on its older services. While these efforts don’t erase its weak stock performance, they do make the full picture more balanced.

In this article, I’ll explain why CGI could be worth considering and what makes it one of the most overlooked stocks on the TSX today.

An overlooked Canadian tech stock

Simply put, this Canadian technology firm provides information technology and business consulting services around the world. Its offerings range from strategic consulting and systems integration to managed IT services, business process services, and intellectual property solutions.

After diving by nearly 24% so far in 2026, CGI stock now trades at $95.90 per share, giving it a market cap of roughly $17.5 billion. In addition, the stock offers a small 0.7% annualized dividend yield.

The recent decline in CGI stock is part of what makes this overlooked TSX stock even more interesting today, as the company remains profitable and continues to show growth in several important areas.

Strong results beneath the weak share price

In the third quarter of fiscal 2026 (ended in June), the company’s revenue rose 2.5% year over year (YoY) to about $4.2 billion. CGI’s net earnings climbed nearly 14% YoY to $465 million, while earnings per share jumped 22.5% to $2.23.

Adding to the optimism, its cash generation remained strong as the business generated about $605 million in operating cash flow during the quarter, up from roughly $487 million a year ago.

CGI ended the June quarter with a solid backlog of $31.8 billion, compared with $30.6 billion a year ago. Meanwhile, its trailing 12-month book-to-bill ratio reached 108.1%, with the company focusing on government-sector awards.

For a stock that has struggled on the market, those figures suggest the underlying business is performing much better than the share price might imply.

New growth opportunities are taking shape

Another key reason you may want to consider this overlooked TSX stock right now is CGI’s continued investment in emerging technologies. Earlier in September, CGI acquired Callibrity, bringing 120 consultants into the business while expanding its capabilities in production-ready enterprise AI, platform engineering, and digital product development.

Similarly, the company recently partnered with D-Wave Quantum to help clients apply quantum computing to areas such as transportation, retail, production planning, energy-grid optimization, and asset maintenance scheduling.

More importantly, CGI Federal also entered an applied research agreement with the U.S. Defense Logistics Agency and the University of Tennessee. This initiative will explore how agentic AI and quantum computing could support warehouse management and improve supply-chain and logistics resilience.

Such projects give CGI more exposure to technologies that could become increasingly important for enterprise and government clients. Combined with its large backlog, rising earnings, and strong cash generation, these strengths make CGI an attractive, overlooked TSX stock for long-term investors willing to look past its recent share-price weakness.

The post 1 of the Most Overlooked Stocks on the TSX Right Now appeared first on The Motley Fool Canada.

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Fool contributor Jitendra Parashar has no position in any of the stocks mentioned. The Motley Fool recommends CGI. The Motley Fool has a disclosure policy.

Despite macroeconomic worries, the S&P/TSX Composite Index has surged more than 20% over the last year. This market rally, even amid a shaky economic environment, is not only confusing investors but also making it difficult for them to find Canadian stocks that still look reasonably valued.

That’s why I think some of the more interesting opportunities may be hiding among companies that have recently moved in the opposite direction of the broader market. And BlackBerry (TSX: BB) is one of them. Its shares have fallen 21% over the last three months, yet the company’s financial growth and fundamental outlook remain solid. For someone looking to put $2,000 to work, that disconnect between its stock price and improving business performance is difficult to ignore.

Let me explain why BlackBerry’s recent pullback, improving profitability, and growing QNX business make it an undervalued Canadian stock worth considering on the TSX today.

Why BlackBerry looks interesting now

With a remarkable history of reinvention, BlackBerry today looks very different from the smartphone company many investors still remember. Its business is now focused largely on its software businesses through its secure communications, QNX, and licensing segments. Notably, its QNX business mainly provides foundational software for automotive and other safety-critical systems.

Although BB stock has gained 79% over the last year, it has dived nearly 35% quarter-to-date and 21% over the last few months. As a result, it now trades at $11.57 per share with a market cap of $6.8 billion.

Despite that recent weakness, BlackBerry’s underlying business has been moving in a much more encouraging direction. While this alone doesn’t prove the stock is undervalued based on traditional valuation measures, the gap between its recent share-price performance and improving fundamental growth outlook is certainly worth watching.

Growth is showing up in the numbers

In the second quarter of its fiscal year 2027 (ended in August), the company’s revenue jumped 26% year-over-year (YoY) to US$163.3 million. Its adjusted gross margin also improved by three percentage points from a year ago to 78.2%.

Adding to the optimism, BlackBerry’s profitability is continuing to improve even faster. Last quarter, the company’s adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) surged 81% YoY to US$47 million, giving it a 29% adjusted EBITDA margin. Its operating income on a GAAP (generally accepted accounting principles) basis soared 192% YoY to US$33.6 million, while adjusted net profit climbed 79% to US$43.2 million.

Meanwhile, the Waterloo-based software firm is also seeing stronger cash generation. Its operating cash flow in the latest quarter strengthened to US$29.3 million from just US$3.4 million a year ago. This clearly shows that BlackBerry’s turnaround is beginning to translate into real cash generation, giving it more financial flexibility to invest in QNX and other growth initiatives.

QNX could drive the next chapter

For investors considering investing in BlackBerry today, the growth potential of the QNX platform could make the recent pullback in BB stock even more interesting. In the August quarter, the segment delivered record quarterly revenue of US$80.3 million, up 27% YoY. More importantly, QNX’s adjusted EBITDA also climbed 41% from a year ago, while its adjusted gross margin expanded by four percentage points to 87%.

And that’s not all. Coretura, the commercial vehicle joint venture between Volvo Group and Daimler Truck, selected Alloy Kore for its next-generation platform. BlackBerry calls it the largest design win in QNX history, adding more than US$100 million to its QNX royalty backlog.

Beyond automotive, QNX is also expanding into robotics, medical systems, industrial applications, and physical artificial intelligence (AI). To give you an idea, general embedded markets already account for around 20% of QNX revenue.

Taken together, stronger growth, rising profits, improving cash flow, and an expanding QNX outlook clearly make BlackBerry an attractive Canadian stock to consider with $2,000 after its recent pullback.

The post An Undervalued Canadian Stock to Buy With $2,000 Now appeared first on The Motley Fool Canada.

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• TSX Today: What to Watch for in Stocks on Friday, September 25

Fool contributor Jitendra Parashar has positions in BlackBerry. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

The latest ranking of the 30 top-performing growth stocks on the Toronto Stock Exchange arrived with some emphatic changes. While the average top growth stock in the 2026 TSX30 averaged a record 785% capital gain over three years, beating last year’s 431%, Canadian technology leader Celestica (TSX: CLS) generated more than triple that investment return. Celestica stock’s staggering 2,590% gain between June 30, 2023 and June 30, 2026 could have turned a $1,000 investment into almost $27,000 in just 36 months!

What propelled Celestica stock to a 2,600% gain?

Stock price returns stem from two core sources: growth in fundamental metrics (revenue, earnings, and cash flow per share) and valuation multiple expansions driven by investor sentiment. Celestica stock fired on both cylinders, powered by the artificial intelligence (AI) boom.

Historically a cyclical electronics supply chain partner, Celestica pivotally captured massive demand for AI data centre infrastructure. Its Connectivity & Cloud Solutions (CCS) segment, particularly high-speed data centre switchgear, saw orders surge, pricing firm up, and margins expand.

Quarterly revenue leaped nearly 2.5 times from $1.9 billion during the second quarter of 2023 (Q2 2023) to nearly $4.7 billion by Q2 2026. As revenue per share and diluted earnings per share (EPS) surged, the market’s willingness to pay for those earnings tripled, expanding its forward price-to-earnings (P/E) multiple to about 33 times.

CLS Normalized Diluted EPS (TTM) data by YCharts

Can CLS stock keep rising?

The better question from a growth investor could be: could Celestica grow its revenue and earnings some more into the foreseeable future, and will the market continue to pay top dollar per each dollar of earnings? Both scenarios could still play out into 2027.

Celestica stock’s future price performance hinges on whether AI infrastructure spending remains resilient. Fortunately for bullish investors, AI adoption is still transitioning from initial model training to massive, ongoing inference workloads. As agentic AI and complex reasoning tasks scale across the world economy, corporate networking demands are skyrocketing well beyond traditional hyperscalers.

Celestica is uniquely positioned to capitalize on this sustained demand growth wave as its latest DS6000-series switches shift revenue towards higher-margin lines, unlocking further operating leverage and boosting free cash flow margins.

Further, Celestica’s strategic partnerships, including custom design wins and integrations into Advanced Micro Devices’s (AMD) Helios rack-scale AI architecture and OpenAI’s custom Jalapeño inference platform solidify Celestica’s role in cutting-edge AI deployments.

While critics reasonably question if AI investments could stall, citing calls by players like Anthropic to slow down frontier model development, the economic reality resembles a classic prisoner’s dilemma. Tech giants cannot afford to stop investing in AI infrastructure lest they fall behind in the race toward Artificial General Intelligence (AGI). Furthermore, inference demand scales directly with active usage, creating persistent pull-through demand for Celestica’s high-density switchgear.

Valuation and key risk considerations on CLS stock

At a forward P/E of roughly 33 times, Celestica stock no longer trades like a sleepy manufacturing partner. However, with earnings growing at a rapid clip, its forward price-to-earnings-to-growth (PEG) ratio sits around 0.6, a level that traditionally signals growth at a reasonable price.

Investors must remain clear-eyed about the risks on Celestica stock, though. Outside of its booming cloud and enterprise division, Celestica’s legacy segments, including Advanced Technology Solutions (ATS), remain cyclical. Should hyperscalers trim capital expenditures or community activism slow data centre construction, valuation multiples could contract rapidly.

Foolish takeaway

Celestica has morphed from a contract manufacturer into an indispensable AI networking architect. While investors shouldn’t expect another 2,600% surge over the next three years, CLS stock remains an attractive growth holding for long-term investors looking to play the secular expansion of global AI computing infrastructure.

The post This TSX Stock Turned $1,000 Into Nearly $27,000 in 3 Years appeared first on The Motley Fool Canada.

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• Got $1,000? 3 Canadian Stocks I’d Buy Right Now
• Celestica Stock Has Been a Roller Coaster: What I’d Do With It Now
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Fool contributor Brian Paradza has positions in Advanced Micro Devices. The Motley Fool recommends Advanced Micro Devices and Celestica. The Motley Fool has a disclosure policy.

If you ask me whether it’s too late to invest in artificial intelligence (AI), I’d say investors may simply need to look beyond the companies getting most of the attention. AI needs enormous computing power, and all those new AI data centres also require transformers and other electrical equipment to keep that power flowing reliably.

That’s exactly where Hammond Power Solutions (TSX: HPS.A) plays an increasingly important role. This Guelph-based company is already seeing data centre demand translate into stronger shipments, especially in the United States.

Let me explain why Hammond Power could continue cashing in on the AI-driven data centre boom even after its spectacular stock-price rally in recent years.

Why Hammond Power stock looks attractive

First, let’s take a closer look at the role HPS plays in the growing data centre power market. The company mainly makes dry-type transformers, power quality products, related magnetics, and power conversion systems used across electrical infrastructure and industrial applications. Its products serve several markets, including data centres, oil and gas, mining, commercial construction, and wind power generation, making its business diversified.

At the time of writing, HPS stock closed at $279.22 per share with a market cap of $2.5 billion. Its shares were up 75% year to date and 128% over the previous year. At this market price, the stock also offered an annualized dividend yield of about 0.4%.

There are plenty of reasons that have helped the stock surge of late. For example, HPS was recently included in the 2026 TSX30 ranking for the third consecutive year. The ranking recognizes the Toronto Stock Exchange‘s top performers based on dividend-adjusted share price performance over three years.

Now, let me highlight some more key fundamental factors behind its recent rally.

Growth is showing up in the numbers

Notably, the AI data centre boom is already making a noticeable difference in HPS’s financial performance. In the second quarter of 2026, the company posted record sales of $324.8 million, up nearly 45% year over year (YoY). Its sales from the U.S. and Mexico jumped 73% YoY with the help of higher data centre shipments, modest improvement in industrial markets, and better price realization.

Demand for its products also remains strong beyond current shipments. At the end of the latest quarter, HPS’s backlog was nearly 97% higher than a year ago, mainly because of large project orders linked to data centre activity.

On the profitability side, the company’s gross margin reached 31.5% in the June quarter, compared with 30.7% a year ago. Pricing actions, a stronger mix of custom products, and operational improvements helped expand margins.

More capacity for the AI data centre boom

I expect the next part of Hammond’s growth story to be driven by its focus on increasing manufacturing capacity to keep up with demand.

In September, the company signed a long-term lease for a new manufacturing facility in Fort Worth, Texas, with production expected to start in stages during the fourth quarter of 2027.

Once the initial phase begins operating, HPS expects the site to add about $250 million in annual manufacturing capacity. To equip and commission that first phase, the company plans to invest roughly $50 million.

More importantly, depending on market demand and additional investment, the Fort Worth site could eventually support about $400 million in annual manufacturing capacity. This location should also bring HPS closer to important U.S. customers and shorten delivery distances for certain products.

Foolish bottom line

Clearly, Hammond Power stock has meaningful exposure to one of the biggest infrastructure trends in the market today.

With AI data centre activity already boosting shipments and backlog, the company’s capacity expansion could give it more room to benefit as that demand continues to grow, making it an attractive buy-and-hold stock.

The post Hammond Power Solutions Stock Could Cash in Big on the Data Centre Boom appeared first on The Motley Fool Canada.

More reading

• I’m Watching Hammond Power’s Backlog, Now Nearly Double Last Year’s
• I’m Betting on Hammond Power After a 45% Sales Jump
• AI Needs More Than Chips: These Canadian Stocks Have Something it Needs
• Hammond Power Solutions Stock Rides the Grid Electrification Boom to a 625% Gain
• TSX Today: What to Watch for in Stocks on Wednesday, September 23

Fool contributor Jitendra Parashar has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Hammond Power Solutions. The Motley Fool has a disclosure policy.

Bitcoin miner Hut 8 (TSX: HUT) has long been a favourite alternative for short-term investors who seek exposure to Bitcoin prices. However, something has changed. The stock jumped 645% over 12 months ending June 20, 2026, and sustained the high price instead of falling back to its starting point in the crypto cycle. Although it witnessed a 36% correction in July and August, the stock bounced back 38% in September. And this time, the key factor driving the rally is not Bitcoin prices.

What is driving Hut 8’s stock price?

Hut 8 is diversifying away from Bitcoin mining to a power-first artificial intelligence (AI) data centre and energy infrastructure platform. Hut8 has three business segments: Compute (Bitcoin mining, AI, and traditional cloud), Power (energy development, construction, and operations), and Digital Infrastructure (co-location, leasing, and hosting). AI data centre revenue will be reported in the Digital Infrastructure segment. This segment represented just 4%, or US$9.6 million, of 2025 revenue of US$235.1 million.

In the second quarter, the company stated that it secured US$7.5 billion in project financing for Beacon Point Phase 1 and Google-backed River Bend. These, along with Beacon Point Phase 2, make a gigawatt-scale AI data centre campus.

Hut 8 has already secured a 15-year lease for the gigawatt capacity, which will bring in a total lease revenue of US$26.6 billion at the base level. When converted to annual net operating income, it comes to over US$1.75 billion and will be reflected once the data centre operations commence in 2027.

The anticipation of stable leasing revenue from AI data centers is driving the stock up. The July and August correction in Hut 8’s stock price matches the slowdown in AI growth momentum. Hence, it comes as no surprise that Hut8 has moved from being only a Bitcoin miner to AI infrastructure services.

Is this Bitcoin miner still a buy?

A stock that used to hover in the $13-$30 range suddenly jumps to the $144 price range. This raises a question: is this stock still a buy at the current price point? Note that the company’s business operations are undergoing a 360-degree change. Unlike Bitcoin mining, AI infrastructure is a steady business, and hyperscalers are grabbing all the AI capacity they can get their hands on. Moreover, Hut 8’s strength is the control of scarce, pre-permitted power infrastructure in Texas that hyperscalers seek.

This is a stock to buy the dip. Valuations may not justify the exponential growth that will come from AI infrastructure in the next two to three years, as price-to-earnings (P/E) looks at past year earnings per share (EPS) and the forward P/E ratio at the next 12 months’ EPS.

Both past and upcoming EPS will likely be negative as Hut 8’s accelerated capital spending and debt increase its interest expense and depreciation. Moreover, unrealized losses on digital assets (Bitcoin) pull down the bottom line to a net loss of US$177.1 million in the second quarter and US$248.0 million in 2025.

If you are worried about the piling debt on its balance sheet, it is linked to each data centre and will be paid from the projects’ cash flows. This debt has no recourse to Hut 8. Buy and hold the stock for the next five years as Hut 8’s projects commission. The stock has the potential to make it to the TSX 30 list of top-performing stocks and grow your money significantly.

The post Hut 8 Stock Is Up 645%: Is This Bitcoin Miner Still a Buy? appeared first on The Motley Fool Canada.

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Fool contributor Puja Tayal has no position in any of the stocks mentioned. The Motley Fool recommends Alphabet. The Motley Fool has a disclosure policy.

When looking for artificial intelligence (AI) winners, Calgary-based energy sector veterans don’t usually top the list. Yet, Enerflex (TSX: EFX) stock has recently shown some surprising exposure to the AI value chain in 2026, a development that may extend the stock’s 300% gain over the past three years.

While most Canadian investors hunt for AI upside in expensive tech stocks and chipmakers, Enerflex reveals a far more lucrative data centre construction bottleneck: electricity. Hyperscale data centres face massive power grid delays, and Enerflex is using its three decades of industrial power generation expertise to supply direct, off-grid natural gas, electricity, and specialized cooling systems. With a massive 7-gigawatt (GW) opportunity pipeline and a valuation trading at a steep discount, this traditional energy infrastructure player offers unexpected AI tailwinds at a bargain price.

The AI grid crunch meets Enerflex’s 30 years of expertise

In early 2026, Enerflex secured a landmark order to supply custom power generation units for a major U.S. data centre project. With annual data centre capital expenditures projected to top US$300 billion through 2030, Enerflex estimates a US$15 billion addressable market specifically for its reciprocating gas engine power blocks.

Founded in 1980, Enerflex historically made its mark engineering and manufacturing natural gas compression and processing equipment. But the AI boom demands an unprecedented amount of 24/7 baseload power that electrical grids simply cannot deliver quickly enough.

Enerflex’s electric power generation segment has solutions that meet data centre builders’ electricity needs. Capitalizing on 30 years of industrial power design, the company is expanding rapidly into energizing mission-critical digital infrastructure.

Solving the hyperscaler power and cooling dilemma

Data centre power generation is now an explicit pillar of Enerflex’s growth strategy. On its second-quarter 2026 earnings call, management revealed that its distributed power pipeline expanded beyond 7 GW across data centre and power applications, with commercial teams actively negotiating the top 2 GW directly with hyperscalers and prime power developers seeking off-grid, behind-the-meter fixes.

What makes Enerflex’s offering unique for data centres is twofold. Firstly, Enerflex builds combined cooling, heating, and power (CCHP) systems that capture engine exhaust heat and convert it into chilled water via absorption chillers, delivering continuous 24/7 power and cooling in a single package. Secondly, while data centres traditionally relied on diesel generators for backup, Enerflex utilizes fast-start natural gas engines that match diesel load-acceptance speeds without the messy fuel management or heavy emissions of diesel.

EFX’s strong backlog at a bargain valuation

Beyond the emerging AI upside, Enerflex is backed by rock-solid operating fundamentals. Approximately 65% of its revenue is recurring, providing incredible cash flow stability. Furthermore, the company closed the second quarter with a massive US$1.5 billion engineered systems (ES) segment backlog, providing clear long-term earnings visibility.

Despite double-digit earnings growth prospects, the market still prices Enerflex stock like a traditional cyclical energy sector stock.

EFX stock trades at a forward P/E of just 12, accompanied by a forward price-earnings-to-growth (PEG) ratio of 0.3. A PEG ratio well below 1 indicates a stock that may be significantly undervalued relative to its future earnings growth trajectory.

Investor takeaway

Enerflex stock isn’t a typical tech play, and that’s precisely why it’s compelling for investors who believe in its emerging capacity to provide data centre customers with the scarce energy they need today. As tech giants race to secure off-grid electricity to keep their AI models running, Enerflex stands ready with proven natural gas and trigeneration solutions. Canadian investors seeking a low-multiple valuation, strong recurring cash flow, and a hidden AI upside may take a closer look at Enerflex stock today.

The post This Canadian Stock Has Data Centre Upside I Didn’t Expect appeared first on The Motley Fool Canada.

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Fool contributor Brian Paradza has no position in any of the stocks mentioned. The Motley Fool recommends Enerflex. The Motley Fool has a disclosure policy.

Constellation Software (TSX: CSU) stock fell 12% in September as tariff wars escalated and fears of an interest rate hike set a bearish tone for the market. The stock has been on a downtrend since May 2025 after founder Mark Leonard abruptly stepped down. No succession, no smooth transition. For a company that operates as a venture capital firm, its strength is the founder’s discipline in valuing a company, retaining permanent ownership, and constructing incentive and return structures for shareholders.

Why did the market punish this stock?

Most investors were invested in Constellation stock because of the trust, loyalty, and reputation Leonard built over the years. Constellation never issued share-based compensation, nor bought back shares or diluted them. The executives had to buy stock with their own money, bringing skin in the game.

Leonard even stopped doing quarterly earnings calls in 2018, and still Constellation stock soared at an average annual rate of 30%. That showed the level of trust he had built. Thus, it comes as no surprise that some investors exited after Leonard stepped down for health reasons.

Another core reason Constellation Software stock got punished was the artificial intelligence (AI) anxiety. With AI writing codes, investors were concerned that reduced software development costs could make Constellation’s over 1,000 vertical-specific software (VSS) portfolio obsolete. Its portfolio comprises many small software companies whose code was written in the 1990s and has been sticky with small business owners.

How AI will impact Constellation’s business model is a black box. Its current CEO, Mark Miller, has been honest about AI concerns, saying it is too early to say. “We are not going to give you an AI target, an AI revenue line, or an AI timeline. If we start reporting a number like that, we will start managing to it,” he said. Investors were not happy with the uncertainty in the answer, leading to a sharp correction.

The market has punished this stock enough

The same two reasons can also be viewed from a contrarian angle. Let’s begin with AI. The AI anxiety has deeply discounted software stocks. Many software company founders are willing to sell their companies at deep discounts, creating several acquisition opportunities for Constellation.

While I am not denying the AI threat, Constellation hasn’t reported any significant churn from VSS. Their software is vertically integrated three to four layers deep into the business, customized to the business, industry, and city rules. They are so mission-critical to the working of the business and rarely cost a single-digit percentage of operating costs. Transferring years of data, formulas, and rules is a hassle, and businesses may not want to bear the cost of switching software until AI can give something more.

While AI may not see churn in old customers, acquiring new customers might be difficult, as new-generation entrepreneurs build AI-first companies. Constellation’s portfolio companies are experimenting with AI at their individual company level. Constellation’s decentralized leadership allows companies to operate individually and be responsible for their own profit and loss. This mitigates the risk of AI failure for Constellation as a holding company. Thus, AI anxiety, although real, has already been priced in.

As for management change, Mark Miller has to win investors’ trust. To that end, he has restarted earnings calls and tweaked the strategy. Instead of acquiring small VSS worth $5–$10 million, Constellation is acquiring minority stakes in larger public companies under the Permanent Engaged Minority Shareholder (PEMS) investments. This strategy shift is necessary, as other venture capitalists are replicating Constellation’s strategy, making VSS company prices competitive.

Moreover, Constellation is earning close to $1.7 billion in cash annually, which it needs to reinvest. Sticking to $10 million annual revenue companies will require Constellation to acquire several companies to use up its free cash flow. Constellation is unwilling to buy these small companies at a premium and reduce its internal rate of return. Hence, it is targeting larger public companies at distressed valuations. It remains to be seen how the new strategy fares.

Buy Constellation stock before sentiments turn

Like all private equity firms, Constellation’s initial returns may be slow as the company spent capital to acquire the company. Once the PEMS strategy starts generating returns, sentiment may change and drive the stock price.

The post The Market Has Punished This Stock Enough: I’d Buy Before Sentiment Turns appeared first on The Motley Fool Canada.

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The Motley Fool has positions in and recommends Constellation Software. The Motley Fool has a disclosure policy. Fool contributor Puja Tayal has no position in any of the stocks mentioned.

Many tech platforms come and go, but few convert tech into a responsible business. Shopify (TSX: SHOP) is one of them. It successfully made a place for itself in the e-commerce landscape dominated by Amazon and Alibaba. The ride was never smooth for Shopify. The 2022 tech stock meltdown was one of its worst setbacks. To build an end-to-end solution, Shopify launched a logistics business. However, logistics was asset-heavy and didn’t align with Shopify’s asset-light model. While the idea was strategic, the timing was bad.

A logistics business needs a certain scale of regular order volumes and cash flow to make economic sense. The 2021 pandemic rally pulled 10 years of future growth into a single year. However, the end of lockdown in November 2021 and the interest rate hike in April 2022 pushed growth into the future.

Shopify has earned a permanent spot in my portfolio

Slow, resilient growth is always better and stronger than quick, windfall growth. Shopify has moved past the windfall growth, offloaded its logistics business, and achieved resilient growth over the last three years. The e-commerce platform has turned its operations profitable and reported a double-digit free cash flow margin in the last 12 quarters.

The above table shows how Shopify’s revenue growth rate accelerated, slowed, and is now gradually accelerating without any external catalyst, like the pandemic. This has earned Shopify a permanent spot in a long-term portfolio.

The resilient growth of Shopify

Shopify’s resilient growth in the last three years came despite geopolitical tensions, tariff wars, and the AI boom disrupting trade, making goods expensive, and cutting IT jobs. Despite the chaos, Shopify’s gross merchandise volume (GMV) kept growing. Its revenue from apps, themes, domains, and other platform fees increased, hinting that existing customers expanded their Shopify stores.

Shopify used AI to help customers shop for the right products and help merchants target the right customers. AI also partly contributed to accelerated revenue growth.

How to maximize returns from this growth stock

Despite global expansion, Shopify experiences seasonality. The holiday season continues to be its strongest, and March its weakest. Shopify’s share price tends to rally from October to February and fall between March and June. For such a seasonal stock, profit booking and reinvesting can help compound returns when done in a Tax-Free Savings Account (TFSA).

You could consider buying Shopify stock between March and June. Suppose you invested $10,000 in April when the shares traded at $163; you would own 61 shares. Shopify tends to give a 50% capital appreciation during the holiday season. Add 50% to $163; you could consider selling 30 shares for $240–244. Why sell only half the holdings?

Consider retaining 50% of the shares for long-term growth and using the remaining 50% for booking short-term profit. If you sell 30 shares for $240, you will get $7,200, which means a $2,200 capital gain. And since the profit booking is happening in a TFSA, the gain is tax-free. You can use this money to buy more Shopify shares in April. If you buy more shares at $170 per share, you can buy 42 shares. You sell 30 shares and buy 42 shares, making 12 shares free.

In some years, even the holiday season may pull down the share price. Understand the reason for the downturn, whether it is short-term or long-term, and buy more shares at the dip. This way, you can accumulate a sizeable number of shares through compounding without investing much.

The post Why Shopify Stock Has Earned a Permanent Spot in My Portfolio appeared first on The Motley Fool Canada.

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The Motley Fool has positions in and recommends Shopify. The Motley Fool recommends Amazon. The Motley Fool has a disclosure policy. Fool contributor Puja Tayal has no position in any of the stocks mentioned.

The day was July 31, 2026. Telus Corporation (TSX: T) stock nose-dived 14.5% after the company slashed its dividend by 55% and made some long-term adjustments to its dividend policy. Among the three noteworthy changes in dividend policy were:

• Pausing dividend growth until the share price revives.
• Pulling forward the end of the 2% dividend reinvestment plan (DRIP) discount from the end of 2028 to October 1, 2026.
• Reducing the long-term dividend payout target to 45–60% of free cash flow (FCF) from 60–75%.

Interestingly, it has reduced its 2026 FCF guidance from $2.45 billion to $1.8 billion. Even if the company increases FCF by 10% annually for the next two years, it will reach $2.2 billion by 2028. This shows that the Telus of 2025 is a thing of the past.

Telus looks to find solid ground

In 2026, Telus is looking to stabilize its capital structure and revive its balance sheet while catching up with artificial intelligence (AI). The desperation to find solid ground in the avalanche of technology upgrades and regulatory changes is visible.

Telus began a phased rollout of its 3G network in Manitoba starting December 31, 2025, and plans to shut down the network nationwide by March 1, 2027. The old has to go to make way for new 4G and 5G networks.

It acquired Telus Digital for US$539 million in October 2025 for its recurring cash flow from SaaS services. However, it impaired $2.1 billion in goodwill in the second quarter of 2026, when a portion of that very cash flow became irrecoverable due to AI adoption.

Telus is now looking to invest in AI and satellite broadband to participate in the next generation of communication networks. This disruption and recreation is a normal lifecycle for telcos, like a phoenix rising from its ashes. BCE faced a similar situation in 2025. It stood its ground and continued its biggest restructuring from telco to techno.

The next chapter for Telus is yet to begin

Telus will write the next chapter in its journey over the next three years. The management that monetized the 3G and 4G network has retired. The company now has a new CEO, Victor Dodig, and a new CFO, Gopi Chande.

The new management will lay the blueprint for Telus’s next chapter in the third-quarter earnings call in November. Until then, Telus floats on murky water. The dip in the stock price after the dividend cut might look like an attractive opportunity.

However, Telus is not yet out of the tunnel, and ideas are still being brainstormed. It has already revised its capital plan twice in six months. I won’t be surprised if there is another revision in the third-quarter earnings, the one planned by the new management.

Is Telus stock worth buying now?

For now, I suggest holding off on buying Telus stock until the company presents a stable capital plan and sticks to it for at least six months. Its average revenue per user (ARPU) is declining owing to the regulatory change that allowed mobile virtual network operators like Cogeco Communications (TSX: CCA) to access Telus and BCE networks.

Instead of Telus, Cogeco is a better dividend stock to buy. Cogeco has a 30% dividend payout ratio. It is in a better position to manage falling ARPU because of its asset-light business model. Unlike Telus and BCE, which are chasing AI and satellite communication, Cogeco is building the tried-and-tested wireless data, upgrading from wireline broadband.

Between Telus’s 5.6%, BCE’s 5.3%, and Cogeco’s 6.6% dividend yield, Cogeco’s is the safest, as it is already at a dividend payout ratio of around 40%. BCE and Telus had to halve their dividends to reduce their payout level to 40%. Moreover, Cogeco still has room to grow dividends, depending on the traction of its wireless data business.

The post Telus Cuts Its Dividend: Is the Stock Worth Buying Now?  appeared first on The Motley Fool Canada.

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• Is TELUS a Good Stock to Buy After Finally Cutting its Dividend?
• I’m Not Selling Telus After the 55% Dividend Cut: Here’s Why
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• Telus Cut Its Dividend: Is the Stock Worth Buying Now?

Fool contributor Puja Tayal has no position in any of the stocks mentioned. The Motley Fool recommends Cogeco Communications and TELUS. The Motley Fool has a disclosure policy.