Canadian productiveness relative to many different developed nations (primarily the U.S.) has lagged in latest many years. There are a variety of causes for this development, with many economists citing an absence of personal funding in key industries and authorities/overseas spending being the important thing driver of the Canadian financial system.
That stated, I feel this actuality implies that some fairly compelling alternatives are hiding in plain sight for lengthy‑time period traders. If AI and automation are going to assist this nation degree up, you wish to personal the picks-and-shovels companies truly driving these effectivity features.
Listed below are two high TSX names I’d take a look at immediately.
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Celestica
One high Canadian inventory I feel has quietly change into a worldwide gem is Celestica (TSX:CLS).
Celestica has change into one of the essential enablers of the AI knowledge‑centre construct‑out, offering excessive‑finish {hardware}, design, and manufacturing companies to among the largest gamers in tech. As AI workloads scale, demand for servers, networking gear, and specialised {hardware} doesn’t simply rise; it compounds. That’s as a result of each incremental greenback of AI spend wants bodily infrastructure behind it.
Basically, that is now not the low‑margin contract producer many traders bear in mind from a decade in the past. As a substitute, Celestica is now an organization seeing double-digit income development pushed by knowledge centre and cloud prospects. As margins proceed to develop alongside free money circulate, Celestica’s administration staff has loads of flexibility to cut back its debt, enhance buybacks, or interact in focused M&A.
In a market the place numerous “AI” tales commerce at nosebleed valuations, Celestica nonetheless screens as a enterprise the place the basics are catching as much as (and arguably nonetheless lag) the narrative. If Canada goes to see a productiveness enhance from AI, it begins with the {hardware} layer, and Celestica is correct in that slipstream.
Kinaxis
One other high Canadian AI-related identify, Kinaxis (TSX:KXS) has been a high development choose of mine for a while.
On this planet of software program shares, I discover Kinaxis to be a really intriguing alternative immediately. This firm is a pure play on making world provide chains smarter, sooner, and extra resilient. That’s precisely what you need in a world the place productiveness features come from doing extra with the identical belongings. Its AI‑enabled Maestro platform helps massive enterprises plan, simulate, and optimize complicated networks, decreasing stock, downtime, and dear surprises.
The market has largely appeared previous this identify during the last 5 years, with shares seeing muted and even damaging efficiency over that stretch. Beneath the hood, although, the story is far stronger.
Kinaxis has seen a multi-year development of stable income development, pushed by a rising backlog for its AI-driven options. This has led to margin enchancment, recurring SaaS income that’s more and more sticky, and a wholesome steadiness sheet and scalable development mannequin. For traders searching for top-tier development shares, that checks a lot of the containers, in my opinion.
If we’re going to see productiveness enhance in Canada and world wide, these home corporations are value contemplating for these with a long-term investing time horizon.