Top Canadian Stocks to Buy for Growth in 2026

If you want growth in your portfolio this year, two Canadian small caps deserve your attention right now: Hammond Power Solutions (TSX:HPS.A) and BQE Water (TSXV:BQE).

These are not household names. But the numbers behind them are hard to ignore. One is riding the global wave of electrification and data centre construction. The other is quietly building a recurring revenue machine in the niche but critical world of mine water treatment.

Both posted record results, and their management teams are signaling that 2026 could be even better.

Here is the bull case for these two top Canadian stocks.

Is this TSX stock a good buy?

Valued at a market cap of $3.6 billion, Hammond Power Solutions makes power transformers. Data centres, electric vehicle charging networks, grid upgrades, and industrial electrification projects need massive amounts of power infrastructure to come online, making Hammond Power a top stock to own right now.

In the first quarter of 2026, the company posted sales of $264.8 million, an increase of 31.5% year over year. Growth was led by the U.S. and Mexico, where revenue rose nearly 42% year over year.

Moreover, the backlog grew sequentially and is significantly higher than it was a year ago, providing visibility into future growth.

Adjusted earnings per share rose from $1.60 to $2.08 over the last 12 months. It also reported that adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) rose to $41 million, compared to $30.9 million in the prior-year period.

Hammond’s CEO, Adrian Thomas, noted that demand for custom products, particularly for data centres, continues to drive both volume and a more profitable product mix.

The company expects to have roughly $1.2 billion in annual revenue capacity by year end as its manufacturing expansion in Mexico ramps up.

Analysts tracking the TSX stock forecast free cash flow to expand from $63 million in 2026 to $168 million in 2030.

For investors, Hammond offers a rare combination: a boring, real-world industrial business with explosive demand tailwinds and a growing backlog.

Is this small-cap stock undervalued?

BQE Water is one of the more compelling under-the-radar growth stories on the TSX. The company provides water treatment services and technology to the mining industry, with a focus on recurring fee-based contracts. It doubled sales in 2025 to $35.5 million, while net income grew 68% to $8.1 million and adjusted EBITDA rose 47% to $8.2 million.

These numbers reflect two major Yukon chemical services projects that contributed roughly $20 million in revenue, plus expanded operations at Raglan and new plant startups in China and North Dakota.

CEO David Kratochvil was candid about what has changed at BQE. The field operations team has tripled or quadrupled in size over the past year. BQE recently won new contracts at Canadian Royalties and Britannia, both on plants originally built by others.

Management also flagged a meaningful shift in the nature of new work. In early 2025, most technical services projects were small and short-cycle. Now, the pipeline is dominated by prefeasibility and feasibility studies that take months to complete.

Moreover, a new aquatic toxicity lab was near completion as of the Q4 call, adding a fresh revenue stream in environmental testing services that existing clients have already expressed interest in.

Analysts tracking the small-cap TSX stock forecast free cash flow to increase from $4.9 million in 2025 to $7.2 million in 2027. Based on consensus price targets, it trades at a 30% discount as of May 2026.

The post Top Canadian Stocks to Buy for Growth in 2026 appeared first on The Motley Fool Canada.

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Fool contributor Aditya Raghunath 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.