Investing in technology stocks part of rapidly expanding addressable markets should help you generate outsized gains over time. In this article, I have identified two such TSX stocks, one part of the health-tech sector and the other, which has gained significant traction in the space-tech market. Let’s see why.
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Is the TSX tech stock a good buy?
Valued at a market cap of $508 million, Vitalhub (TSX:VHI) provides technology solutions for healthcare providers in Canada, the U.S., the U.K., Australia, and other international markets. Its solutions include electronic healthcare records, case management, patient flow, and operational visibility.
Vitalhub stock went public in July 2015 and has returned over 800% to shareholders. Despite its stellar gains, Vitalhub remains a top buy in March 2025.
In the third quarter (Q3) of 2024, it reported revenue of $16.5 million, a 25% increase compared to last year, driven primarily by growth in its recurring software business.
The healthcare technology company provides patient flow solutions for healthcare systems internationally, and it reported that term license maintenance and support revenue jumped 28% year over year to $13.9 million, representing 84% of total revenue.
“We’re pleased to report our Q3 results, which highlight our continued momentum, growing our recurring revenue base and operating margin profile,” said Chief Financial Officer Brian Gothenburg during the earnings call.
Annual recurring revenue (ARR) reached $53.5 million at quarter-end, up 25% year over year and 4% sequentially from June 2024. Vitalhub maintained strong profitability with adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $4.6 million, representing a 28% margin.
After the quarter closed, VitalHub also announced the completion of two strategic acquisitions. In early October, Vitalhub acquired MedCurrent for approximately $8.3 million, adding $2.3 million in ARR. Later that month, VitalHub closed its largest transaction ever, acquiring Strata Health for $32.3 million, adding $12.3 million in ARR to its Patient Flow suite.
On a pro forma basis, including these acquisitions, VitalHub’s ARR now stands at $68 million, with over $50 million in cash remaining for future deployments.
The bull case for the top TSX stock
MDA Space (TSX:MDA) announced strong Q3 financial results, with revenue reaching $282 million, a 38% increase compared to the same period last year, prompting the satellite and space technology company to raise its full-year outlook.
Adjusted EBITDA rose 30% year over year to $55.5 million, maintaining a solid margin of 19.7%, while operating cash flow surged to $259 million. It generated $205 million in free cash flow during the quarter, a substantial improvement from negative $79 million last year.
MDA raised its full-year revenue guidance to between $1.45 billion and $1.65 billion, up from its previous forecast of $1.2 billion to $1.6 billion. At the midpoint, this represents approximately 30% year-over-year growth.
It ended Q3 with a backlog of $4.6 billion, up nearly 50% from the previous year, providing strong revenue visibility into 2025 and beyond. New order bookings drove the backlog growth, including a $1 billion award for phases C and D of the Canadarm3 program announced in early 2024.
MDA also announced progress on several major programs, including successfully conducting the preliminary design review for the Canadarm3 program and advancing manufacturing of MDA CHORUS, its next-generation Earth observation constellation, now targeted for a mid-2026 launch.
MDA Space broke ground on an 185,000-square-foot expansion to its satellite production facility in Quebec. When complete, the facility will be capable of delivering two MDA AURORA digital satellites per day, making it the world’s largest high-volume manufacturing facility in its satellite class.
With a strong balance sheet showing net debt of $155 million and a leverage ratio of 0.8, MDA Space appears well-positioned for continued growth as it expands its manufacturing capacity and advances its major satellite and space robotics programs.
Analysts forecast MDA Space’s sales to increase from $807.6 million in 2023 to $1.4 billion in 2025. Comparatively, adjusted earnings are forecast to expand from $0.4 per share in 2023 to $0.88 per share in 2025. So, priced at 24 times forward earnings, MDA is reasonably priced and trades at a discount of almost 40% to consensus price targets.
