Small-cap shares might ship outsized returns in the long term, as these firms are nonetheless in earlier phases of growth, can develop at an accelerated tempo, and have vital room to broaden. Nevertheless, small-cap shares are dangerous and extremely risky. They have a tendency to react extra sharply to shifts in market sentiment, modifications within the financial outlook, and company-specific developments. A single earnings report, contract win, or setback can transfer a share value dramatically. In contrast with blue-chip shares, volatility is solely a part of the small-cap panorama.
Thus, fairly than chasing hype, Canadian buyers ought to give attention to small-cap firms with sound fundamentals, a confirmed enterprise mannequin that may be scaled, and powerful management groups. These components don’t remove threat, however they will enhance the percentages of long-term returns.
With that context in thoughts, listed here are two high small-cap TSX shares to purchase proper now for 2026.
Prime small-cap shares #1: Hammond Energy Options
Hammond Energy Options (TSX:HPS.A) is a compelling small-cap inventory to purchase proper now for 2026. The corporate focuses on dry-type transformers, energy high quality options, and different magnetic merchandise. These merchandise are witnessing strong demand amid an ongoing push towards electrification.
Whereas Hammond Energy inventory has already delivered a notable acquire, the corporate’s underlying enterprise momentum suggests there may be nonetheless significant upside. Demand is being pushed by strong exercise in fast-growing sectors comparable to renewable vitality, vital infrastructure initiatives, and vitality distribution. This energy is mirrored in Hammond’s order backlog, which stays elevated. By the tip of the third quarter of 2025, the corporate reported a backlog that was 22.4% increased than the identical interval a yr earlier, highlighting robust visibility into future income.
Administration commentary from the latest quarter displays a optimistic development. Information centre-related demand accelerated meaningfully, with the corporate securing substantial orders shortly after quarter-end. These new orders are anticipated to be shipped primarily in 2026.
Wanting forward, Hammond Energy Options seems well-positioned to profit from long-term electrification developments reshaping international vitality and information infrastructure. Along with natural progress, administration continues to guage acquisition alternatives that would additional improve scale and market attain.
Furthermore, its ongoing manufacturing initiatives and capital growth efforts place the corporate properly for sustained progress, pushed by rising electrical energy consumption and demand for digital infrastructure.
Prime small-cap shares #2: 5N Plus
5N Plus (TSX:VNP) is a sexy small-cap inventory to purchase now for 2026, given its publicity to a number of fast-growing industries. The corporate focuses on superior semiconductors and high-performance supplies with purposes in renewable vitality infrastructure, house satellites, medical imaging, pharmaceutical, and industrial markets. As these finish markets proceed to broaden, demand for 5N Plus’s extremely specialised merchandise will probably develop, supporting its financials.
This beneficial demand backdrop has already translated into significant positive factors for the inventory, and the outlook suggests additional upside potential into 2026. Development is being pushed primarily by momentum within the Specialty Semiconductors phase, the place demand from terrestrial renewable vitality initiatives and space-based solar energy stays strong. A not too long ago expanded provide settlement with a key strategic buyer is anticipated to materially elevate volumes, with shipments projected to extend over the subsequent couple of years. In parallel, the corporate is prone to profit from a powerful pipeline of house energy initiatives.
Additional, its management place in high-purity supplies exterior of China is more and more essential as international prospects search safe, diversified, and geopolitically resilient provide chains. This benefit strengthens its aggressive positioning.
Total, 5N Plus is a sexy small-cap inventory to purchase and maintain for the long run.
