The TSX Index has surged nearly 15% year to date, outperforming the S&P 500’s 10% gain. Canadian investors are increasingly turning their attention to mid-cap stocks—those with market capitalizations below $5 billion—which offer attractive valuations and higher growth potential. One such example is infrastructure-related Badger Infrastructure Solutions (TSX:BDGI).
Although mid-cap stocks may introduce greater volatility, the current macro environment—including interest rate trends, advancements in technology (particularly generative AI), and the relative value within Canadian equity markets—makes a strong case for investing in this segment while it maintains positive momentum. For younger investors seeking growth opportunities within the domestic market, mid-cap index ETFs provide a reasonable option, but selecting individual stocks may deliver even greater upside.
As a provider of mobile hydrovac excavation services, Badger Infrastructure Solutions has posted robust quarterly results, with its stock rising more than 60% so far this year. The company’s recent rebranding (from Badger Daylighting) underscores its strategic focus on infrastructure services. Its core business utilizes non-destructive hydrovac excavation technology, which employs pressurized water to safely expose buried infrastructure such as pipelines without causing damage. Growing infrastructure investments are expected to drive continued increases in demand for Badger’s services.
Notably, data center upgrades represent a promising future growth opportunity. Although this segment currently constitutes a small portion of revenue, it holds significant potential over the next several years. Management’s demonstrated ability to sustain margins amid challenges makes Badger a compelling long-term investment.
With a current market cap of $1.95 billion, the company remains under the radar—but this may change as potential interest rate cuts in Canada and the U.S. could lead to a market reassessment of its value.
