The 1 Canadian Stock I’d Buy to Sleep Well in 2026

A “sleep well” stock in 2026 should not depend on perfect news, perfect rates, or perfect sentiment. It should earn revenue from long-term demand, keep customers coming back, and have enough visibility that you do not feel forced to check the quote every hour. You also want a balance sheet that can handle bumps, because even great businesses hit messy quarters. Most of all, you want a company with a moat that gets stronger with scale, relationships, and switching costs, not weaker. So let’s look at one to consider on the TSX today.

CAE

CAE (TSX:CAE) checks a lot of those boxes as it sells something airlines and governments cannot improvise. It trains pilots, cabin crew, and defence personnel, and it builds simulators and training systems that sit at the centre of safety and readiness. When travel demand rises, airlines need more trained crews. When defence budgets rise, militaries need more training. That creates a steady drumbeat of demand that does not vanish just because the market feels cranky.

The last year also brought a major leadership shift, which matters for any long-term investor. CAE named Matthew Bromberg, previously at Northrop Grumman, as chief executive, with the change effective Aug. 13, 2025. It also reshaped its board leadership, with Calin Rovinescu as executive chair and Sophie Brochu as lead independent director.

On the commercial side, CAE kept stacking up sticky customer wins that look small in a headline and big over a decade. Early in 2026, it announced a training services agreement extension with Cebu Pacific, which signals that airlines still lean on it for recurring training needs. These renewals matter because training relationships tend to last, and they can expand as fleets and routes expand.

Earnings support

The numbers in the most recent reported quarter show a business that still knows how to grind higher. In fiscal Q2 2026, it reported revenue of about $1.2 billion, operating income of $155.3 million, and net income of $73.9 million, with earnings per share (EPS) of $0.23. It also generated net cash from operations of $214 million and free cash flow of $201 million. For a sleep-well stock, cash flow matters more than hype, because cash flow keeps the lights on when markets get dramatic.

Looking past the quarter, CAE has a simple tailwind: the world needs more training capacity. Airlines continue to work through pilot and crew constraints, and fleets keep modernizing, which raises the value of high-quality simulation and training. Defence customers also keep pushing for better readiness, and CAE’s positioning in training and simulation puts it close to that spending. An agreement that positions it as Saab’s preferred supplier for select training and simulation work also points to continued defence momentum.

Valuation is the trade-off. This is not a stock you buy because it looks cheap on a basic multiple. In fact, right now it trades at 31.3 times earnings, so not exactly cheap. That pricing assumes CAE keeps executing, so the easiest way to get hurt is to pay up and then get surprised by a rough quarter.

Bottom line

So could CAE be a “sleep well” buy for others in 2026? It can be, if you like durable demand, recurring training relationships, and a business that can generate real cash while it grows. The risk is that valuation leaves less room for error, and aviation and defence contracts can still create lumpiness. If you can live with that, CAE has the kind of long runway that can make a portfolio feel calmer, even when the headlines do not.

The post The 1 Canadian Stock I’d Buy to Sleep Well in 2026 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 no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.