2 Stocks to Buy as Canada Levels Up Productivity

2026-02-23 20:00:00 ET

Canadian productivity relative to many other developed nations (primarily the U.S.) has lagged in recent decades. There are a number of reasons for this trend, with many economists citing a lack of private investment in key industries and government/foreign spending being the key driver of the Canadian economy.

That said, I think this reality means that some rather compelling opportunities are hiding in plain sight for long?term investors. If AI and automation are going to help this country level up, you want to own the picks-and-shovels businesses actually driving those efficiency gains.

Here are two top TSX names I’d look at today.

Celestica

One top Canadian stock I think has quietly become a global gem is Celestica ( TSX:CLS ).

Celestica has become one of the most important enablers of the AI data?centre build?out, providing high?end hardware, design, and manufacturing services to some of the biggest players in tech. As AI workloads scale, demand for servers, networking gear, and specialized hardware doesn’t just rise; it compounds. That’s because every incremental dollar of AI spend needs physical infrastructure behind it.

Fundamentally, this is no longer the low?margin contract manufacturer many investors remember from a decade ago. Instead, Celestica is now a company seeing double-digit revenue growth driven by data centre and cloud customers. As margins continue to expand alongside free cash flow, Celestica’s management team has plenty of flexibility to reduce its debt, increase buybacks, or engage in targeted M&A.

In a market where a lot of “AI” stories trade at nosebleed valuations, Celestica still screens as a business where the fundamentals are catching up to (and arguably still lag) the narrative. If Canada is going to see a productivity boost from AI, it starts with the hardware layer, and Celestica is right in that slipstream.

Kinaxis

Another top Canadian AI-related name, Kinaxis ( TSX:KXS ) has been a top growth pick of mine for some time.

In the world of software stocks, I find Kinaxis to be a very intriguing opportunity today. This company is a pure play on making global supply chains smarter, faster, and more resilient. That’s exactly what you want in a world where productivity gains come from doing more with the same assets. Its AI?enabled Maestro platform helps large enterprises plan, simulate, and optimize complex networks, reducing inventory, downtime, and costly surprises.

The market has largely looked past this name over the last five years, with shares seeing muted or even negative performance over that stretch. Under the hood, though, the story is much stronger.

Kinaxis has seen a multi-year trend of solid revenue growth, driven by a growing backlog for its AI-driven solutions. This has led to margin improvement, recurring SaaS revenue that’s increasingly sticky, and a healthy balance sheet and scalable growth model. For investors looking for top-tier growth stocks, that checks most of the boxes, in my view.

If we’re going to see productivity increase in Canada and around the world, these domestic companies are worth considering for those with a long-term investing time horizon.

The post 2 Stocks to Buy as Canada Levels Up Productivity appeared first on The Motley Fool Canada .

Fool contributor Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool recommends Celestica and Kinaxis. The Motley Fool has a disclosure policy .

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