Which do you think has bigger upside in 2026—Enerflex’s gas infrastructure play or Hammond’s power solutions for AI?
Have you added either to your portfolio? Share your thoughts below!
While global investors remain fixated on Wall Street tech giants, a growth wave driven by energy transition and digital infrastructure is quietly surging in the Canadian stock market. Two Toronto Stock Exchange-listed names— $Enerflex Ltd(EFXT)$ and $Hammond Power Solutions Inc.(HMDPF)$—are poised to deliver returns well above the broader market for investors in 2026 and beyond, thanks to solid order backlogs, scalable business models, and long-term industry tailwinds.
Despite current market sentiment being constrained by interest rate paths and trade frictions, leading to elevated volatility, truly high-quality growth stocks often stand out in such environments. Enerflex and Hammond Power are prime examples: the former is rooted in the rigid demand for North American energy infrastructure, while the latter rides the electric pulse of electrification and AI computing power explosions. Both boast strong balance sheets, highly recurring revenue streams, and support from irreversible industrial trends—even as short-term macro uncertainties linger, their fundamentals have paved the way for growth over the next two years.
Growth Stock #1: $Enerflex Ltd(EFXT)$ — The "Shovel Seller" in North America’s Natural Gas Wave
Enerflex is an integrated enterprise covering the entire value chain of energy infrastructure, with businesses including the design, manufacture, installation, and maintenance of natural gas compression, processing, cryogenic systems, and produced water treatment equipment. This vertically integrated model allows it to deeply participate in the full project lifecycle—from preliminary engineering to long-term operation and maintenance—strengthening customer stickiness while effectively smoothing the cyclical volatility of the oil and gas industry.
Growth Driver 1: Stable Contract Revenue Forms a Safety Net
The company’s Energy Infrastructure (EI) segment is key to profit growth in 2026 and beyond. This division owns and operates energy assets through long-term contracts, generating highly predictable cash flow. Existing contracts are expected to bring approximately CAD 1.4 billion in revenue over the next several quarters, providing clear visibility into the company’s performance.
Growth Driver 2: Aftermarket Services Contribute High-Margin Recurring Revenue
The Aftermarket Services (AMS) business creates profitable, capital expenditure cycle-independent recurring revenue by providing maintenance, spare parts, and operational support for its large installed base of equipment. The resilience of this segment is particularly valuable during industry downturns.
Growth Driver 3: Full Engineering Systems Backlog, Sustained Demand
The Engineering Systems (ES) segment currently holds a backlog of approximately CAD 1.1 billion, reflecting robust market demand for modular natural gas processing and water treatment solutions. As North American natural gas production and produced water volumes are expected to grow, Enerflex has secured the "ammunition" for future growth.
In terms of capital allocation, the company demonstrates strict discipline, focusing on expanding profit margins, improving free cash flow, and maintaining a healthy balance sheet. This positions Enerflex with an attractive risk-reward profile amid current uncertainties.
Growth Stock #2: $Hammond Power Solutions Inc.(HMDPF)$ — The "Hidden Champion" Amid Surging Power Demand
If energy transition is the backdrop of the era, the explosion of AI data centers is an urgent test for power infrastructure. Hammond Power Solutions is a core beneficiary of this trend. The company primarily manufactures dry-type transformers, power quality systems, and magnetic components—indispensable key equipment in power transmission and distribution networks.
Soaring Orders Confirm Booming Demand
Driven by renewable energy grid integration, grid modernization, and critical infrastructure investment, Hammond Power’s order volume continues to climb. In Q3 2025, the company’s order backlog surged 22.4% year-on-year, providing a solid foundation for revenue in the coming quarters. Notably, accelerated purchases from data center customers have emerged as a new growth engine. Following the earnings report, the company secured multiple large orders, with deliveries primarily scheduled for 2026.
Strategic Acquisition Expands Growth Boundaries
Hammond recently announced the acquisition of AEG Power Solutions, a move that will significantly enhance its technological capabilities in industrial power electronics and further penetrate the infrastructure and energy transition markets. The acquisition also expands the company’s customer base and geographic reach, opening new avenues for long-term growth.
The electrification process, digital infrastructure construction, and structural rise in overall social electricity consumption form strong tailwinds for Hammond’s development in the coming years. Leveraging its leading position in niche segments and astute strategic layout, the company is well-positioned to continuously translate industry dividends into shareholder returns.
Conclusion
While chasing U.S. stock market stars, investors may wish to expand their horizons northward. Enerflex and Hammond Power Solutions represent two highly certain tracks: energy security and power infrastructure. They possess solid order backlogs, scalable business models, and financial flexibility to navigate macro fluctuations. For long-term investors seeking excess returns in 2026 and beyond, these two Canadian stocks deserve a core spot on the watchlist.
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