This mid-cap stock is up almost 100% last year: it’s still dirt cheap

There’s never been a better time to look at the Canadian mid-cap scene, especially if you believe the strength of last year’s Canadian stock market is really about to extend. Of course, there are plenty of big themes and tailwinds to play around with. While the rise of AI and agents may still be worthwhile, even given the increasing risks of a bubble (or at least a correction), I still think it’s critical not to forget all the other industries that can do it well.

Whether they benefit indirectly from the rise of AI or simply aren’t getting enough attention given their own less recognized tailwinds, I think 2026 could be a great year for investors to think about rotation and diversification so they can stay afloat if a bubble forms in some parts of the tech sector.

Remember, there is more to the market than just technology!

So instead of wondering whether or not there is a bubble, investors should be prepared to ride out the curveball the market throws their way. Market crashes and bear markets can happen (in fact, they will happen, probably when you and other investors least expect it), and investors need to know how to navigate them.

Playing the long game in an expensive market

Diversification and a focus on value are the best choices for long-term thinkers who want to position their portfolios to perform well over time without risking bankruptcy in the next market-wide disruption.

While it’s easy to forget past market crashes (particularly the 2000-2001 crisis), it’s important to remember that madness (and crisis) can happen, and it’s smart to temper enthusiasm when momentum gets a little out of hand, while remaining calm when markets eventually start to turn. Whether you like it or not, it will happen at some point, whether you are ready for it or not.

While I don’t believe an AI bubble is about to burst, I do think that picking undervalued stocks is one way to ensure you’re not in the explosion zone if a bubble were to burst. Whether that means investing in stocks beyond AI, or paying more attention to mid-caps, there are options for investors to consider.

Badger stock looks like a mid-cap stock with high momentum that’s worth buying

Badger infrastructure solutions (TSX:BDGI) is a relatively small infrastructure player that has quietly risen almost 96% over the past year. Undoubtedly, the demand for non-destructive hydrovac soil excavation services has increased. And as infrastructure spending, especially in energy and utilities, looks to stay hotter for longer, I think Badger has room for upside, especially given its market leadership. The company has the fleet and, perhaps even more importantly, manages it efficiently thanks to its exceptional managers.

However, the stock is richly valued and now trades at just over 31 times its trailing price-to-earnings (P/E) ratio. That’s the most expensive I’ve seen. That said, the earnings growth trajectory could justify the higher entry price. The forward price-to-earnings ratio of around 21 times makes BDGI shares not seem overly expensive given the opportunities at hand and how well management has proven to be able to execute on them.

Of course, infrastructure developments can be quite cyclical, so BDGI stock is not a name without risk, especially after a boom period. Since infrastructure spending may remain higher for longer while Badger takes steps to improve its margin profile, I foresee above-average growth, perhaps for years to come.