By Rajiv Nanjapla at The Motley Fool Canada
Growth stocks have the potential to grow revenue and earnings faster than the broader market or their industry peers, enabling them to deliver outsized long-term returns. Due to their strong growth potential, investors are often willing to pay premium valuations for these companies, which can push their stock prices significantly higher over time. However, their elevated valuations and rapidly evolving business models can also make them more volatile, which may make these stocks better suited for investors with a higher risk tolerance.
Against this backdrop, let’s look at two growth stocks that could deliver strong returns this year.
Celestica
After generating an impressive return of more than 945% over the last three years, representing an annualized gain of 218.8%, Celestica (TSX:CLS) has continued its strong momentum this year, with the stock rising 28.6% year to date. The company’s robust first-quarter performance and an upgraded 2026 outlook appear to have strengthened investor sentiment and supported the stock’s ongoing rally.
In the recently reported first quarter, Celestica’s revenue increased 52.8% year over year to $4.1 billion, driven primarily by strong growth in its Connectivity & Cloud Solutions (CCS) segment. Revenue from the CCS business surged 76% to $3.2 billion, reflecting strong demand from cloud and AI-related infrastructure customers. Meanwhile, revenue from its Advanced Technology Solutions (ATS) segment remained relatively stable at $810 million. Both business segments also delivered margin expansion, with the CCS segment’s operating margin improving from 8% to 8.6% and the ATS segment’s margin rising from 5% to 6%.
Supported by strong revenue growth and an expansion in adjusted operating margin from 7.1% in the prior-year quarter to 8%, Celestica’s adjusted earnings per share (EPS) climbed 80% to $2.16. Following the strong quarterly performance, management raised its 2026 guidance, with the updated outlook implying year-over-year revenue growth of 53.2% and adjusted EPS growth of 67.8%. In addition, management expects even stronger performance in 2027, supported by improving demand visibility and new program wins. Given its solid execution and strong growth outlook, Celestica appears well-positioned to continue delivering healthy returns for shareholders.
5N Plus
Another growth stock that looks attractive right now is 5N Plus (TSX:VNP), which has surged 117.5% year to date. Strong fourth-quarter fiscal 2025 and first-quarter fiscal 2026 results, along with the company’s exposure to the fast-growing terrestrial renewable energy market, have driven investor optimism and supported the stock’s rally.
In its recently reported first quarter, 5N Plus posted revenue growth of 32.6% year over year to $117.9 million. Higher sales volumes in its Specialty Semiconductors segment and stronger pricing for bismuth-based products in its Performance Materials business drove its sales. The company also expanded its adjusted gross margin by 90 basis points to 35.1%, reflecting improved operational efficiency and a favourable product mix. Supported by these improvements, net income rose 85.5% to $17.8 million, while diluted earnings per share (EPS) increased 81.8% to $0.20.
Looking ahead, management expects demand for Specialty Semiconductors to remain strong, supported by structural growth in key end markets, including terrestrial renewable energy and space solar power. The company’s expertise in supplying ultra-high-purity specialty semiconductor compounds also positions it well to capitalize on long-term industry demand. At the same time, 5N Plus continues to focus on productivity initiatives and capacity-expansion projects to improve operational efficiency and achieve economies of scale.
Meanwhile, management continues to project adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) in the range of $100 million–$105 million this year, with the midpoint representing a 10.9% increase from the previous year. Given its strong financial momentum, expanding margins, and favourable long-term growth prospects, 5N Plus appears well-positioned to continue delivering solid returns for investors.
The post 2 Growth Stocks Set Up for Massive Gains in 2026 appeared first on The Motley Fool Canada.
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Fool contributor Rajiv Nanjapla has no position in any of the stocks mentioned. The Motley Fool recommends Celestica. The Motley Fool has a disclosure policy.
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