The Canadian Company Wall Street Is Ignoring — and Why That’s Your Opportunity

This all caught my eye on February 17, 2026, when Prime Minister Mark Carney launched Canada’s new defence industrial strategy.

The numbers were eye-popping: $180 billion in defence procurement opportunities, $290 billion in defence-related capital investments, 125,000 high-paying jobs, and a projected 50% increase in defence exports and 240% increase in industry revenues.

For years, I have been frustrated that the U.S. has the world’s largest military-industrial complex, while Canada next door has very few publicly traded defense names. So, I went digging. Most of what I found on the TSX was underwhelming.

Then I stumbled across a small-cap company on the Venture Exchange: Kraken Robotics (TSXV:PNG). The stock has already surged more than 800% over the past five years. That made me nervous. Venture stocks can run hard and then crash harder.

So I did some deeper research to see whether Kraken Robotics was hype or substance. Here is what I found, in a nutshell.

What is Kraken Robotics?

Kraken Robotics is a subsea defence and offshore energy technology company. Its products and services focus on high-resolution subsea data and endurance solutions for defence and commercial clients.

They are a key supplier of sensors, batteries, and systems for unmanned underwater vehicles, or UUVs. Think of underwater drones used for surveillance, mapping, mine detection, and infrastructure inspection.

This is strategically important. As Arctic ice melts, shipping routes and resource opportunities open up. Maintaining Arctic sovereignty will require advanced subsea monitoring capabilities. Kraken sits right in that niche.

I also like the business model. About 70% of revenue comes from defense and 30% from commercial energy markets. They sell both high-margin products and recurring services. Services typically have short lead times, from one week to six months. Product sales range from $300,000 sensors to $1 million to $10 million battery systems, all the way up to multi-year programs worth $100 million or more.

They have also grown through acquisitions, including Enitech Subsea, 13 Robotics, PanGeo Subsea, and 3D at Depth. In several cases, they moved from partial to full ownership, integrating capabilities under one roof.

Is Kraken Robotics profitable?

This is where I expected to see red flags. Many TSXV companies survive by selling shares, not products. Kraken is different. As of February 20, the company currently posts a trailing 12-month operating margin of 15.7%.

The balance sheet is also strong. As of the most recent quarter, Kraken held $126 million in cash against $38 million in debt. A current ratio of 7.3 suggests they have more than enough short-term assets to cover near-term liabilities.

Management’s 2025 guidance calls for 30% plus annual revenue growth and EBITDA margins of 20% to 25%. For an early-stage defence tech company, that is very impressive.

But here is the catch. The stock is expensive! On a forward price-to-earnings basis, Kraken trades at roughly 57 times. That means you are paying almost $57 for every $1 of projected profit. That is rich, even for a growth stock.

We have seen U.S. defence tech names justify high multiples before. But when expectations are this high, execution has to be nearly perfect for investors to make a profit at this stage.

Is Kraken Robotics a buy?

If you already own Kraken and have ridden the 800% wave, I understand holding. The structural tailwinds from Canada’s defence push and Arctic strategy are real. And right now, Kraken has very limited domestic competition.

There is also an interesting optional catalyst. If Kraken uplists to the TSX, or eventually dual-lists on Nasdaq, it could attract a wave of U.S. investors who currently cannot or will not buy TSXV names.

But if you are looking to initiate a position today, you need to be disciplined. I am not against paying a premium for growth, but what Kraken trades for today is excessive.

Personally, I would be more comfortable entering at a forward earnings multiple in the 35 to 40 range. That might mean waiting for a pullback or for earnings to catch up to the price.

Could I be wrong? Absolutely. Kraken could keep running. But with speculative, small-cap defence tech, patience often pays.

The post The Canadian Company Wall Street Is Ignoring — and Why That’s Your Opportunity appeared first on The Motley Fool Canada.

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Fool contributor Tony Dong has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Kraken Robotics. The Motley Fool has a disclosure policy.