This Under-the-Radar Tech Stock Can Be Canada’s Next Unicorn

An under-the-radar tech stock could be a unicorn investment, especially if it operates in a fast-growing niche before the market fully understands its potential. This allows early investors to benefit from years of compounding as demand accelerates. These companies usually solve a real, scalable problem with a business model that produces sticky recurring revenue. Once their technology gains adoption, the growth curve can shift sharply upward.

By the time mainstream investors notice, much of the upside is gone. This is why finding these quiet, fundamentally strong innovators early can unlock life-changing returns. And one that belongs on your radar is Hammond Power Solutions (TSX:HPS.A).

About HPS

HPS is a Canadian manufacturing and engineering company that specializes in custom electrical transformers and power-quality systems. This is the backbone of modern power infrastructure. While many investors think of transformers as an old-economy product, Hammond’s technology sits at the centre of the biggest structural changes happening today. It includes electrification, renewable energy adoption, data centre expansion, electric vehicle (EV) charging, and industrial automation. Its products aren’t optional, but required for any system that moves, stores, or conditions electrical power.

What makes HPS particularly compelling is its ability to tailor high-value, sophisticated transformer solutions for emerging sectors like artificial intelligence (AI) data centres, battery storage, and high-frequency power systems. This is a niche with high barriers to entry due to complex engineering, regulatory requirements, and long customer relationships. As the grid modernizes, power demand surges, and AI infrastructure accelerates worldwide, Hammond finds itself in a tailwind-rich environment.

Into earnings

HPS’ most recent earnings highlight just how rapidly the business is scaling. In its latest quarterly results, HPS reported record quarterly revenue growth of 14% to $224 million, driven by exceptionally strong demand from data centre, industrial, renewable energy, and utility customers. Backlogs remain elevated, signalling visibility well into future quarters. The dividend stock continues to operate with healthy gross margins thanks to pricing power and a favourable shift toward higher-complexity, higher-margin custom systems. Net income also climbed significantly to $17.4 million, supported by improved operational efficiency, enhanced supply-chain stability, and expanded production capacity.

The dividend stock strengthened its balance sheet during the quarter, boosting cash reserves while reducing debt and continuing to invest aggressively in automation and manufacturing upgrades. HPS has raised its dividend multiple times in recent years, reflecting strong profitability and confidence in long-term demand. The earnings show a dividend stock not only benefiting from structural mega-trends but executing with discipline, scalability, and financial strength.

The next unicorn?

Hammond Power Solutions may look like an industrial manufacturer, but the AI stock is increasingly functioning like a power-infrastructure technology leader. That’s exactly the kind of quiet compounder that can evolve into a unicorn. The global build-out of AI data centres, electrified transportation, renewable grids, and industrial automation all require specialized transformer technology that few firms in the world can produce at scale. HPS has emerged as one of those few.

What makes HPS even more compelling is its runway. The AI stock is scaling effectively, expanding production capacity, improving automation, and steadily increasing margins. At the same time, it retains a conservative balance sheet, strong cash generation, and a track record of disciplined capital allocation. These are all hallmarks of long-term compounders. While the market still treats it as an industrial, Hammond’s role in enabling AI, electrification, and the future power grid places it much closer to the critical-infrastructure tech ecosystem.

Bottom line

If it continues growing revenue, margins, and global reach at its current pace, HPS could evolve into one of Canada’s most important and most surprising, tech-driven unicorns. Yet even now, investors can gain income through dividends. In fact, here’s what just $7,000 can bring in.

COMPANYRECENT PRICENUMBER OF SHARESDIVIDENDANNUAL TOTAL PAYOUTFREQUENCYTOTAL INVESTMENTHPS.A$169.5241$1.10$45.10Quarterly$6,949.32

Despite operating in a critical, fast-growing segment, HPS trades under the radar, rarely receiving the attention that higher-profile tech firms get. That makes it one solid AI stock that could turn into the next Canadian unicorn.

The post This Under-the-Radar Tech Stock Can Be Canada’s Next Unicorn appeared first on The Motley Fool Canada.

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Fool contributor Amy Legate-Wolfe 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.