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Written by Amy Legate-Wolfe at The Motley Fool Canada
A Canadian stock can “rule them all” in 2026 when it does two things better than everyone else. It compounds reliably and it gives investors a clear reason to keep holding. That usually means a repeatable business model, steady demand, and a management team that keeps making smart decisions when the market gets noisy. The best part is that it doesn’t need a single lucky year. It just needs to keep stacking small wins until the market can’t ignore it. And this one? It could rule every Canadian stock.
Constellation Software (TSX:CSU) does not build flashy consumer apps. It buys and runs vertical market software businesses, which means software built for specific industries like public sector, healthcare, financial services, and dozens of niche corners where switching systems feels painful and expensive. That creates sticky customers and recurring revenue, which is exactly what long-term investors want when they think in decades instead of quarters.
It also wins as it has a clear playbook and it sticks to it. It buys smaller software companies, keeps strong management in place, and focuses on improving the boring stuff like pricing discipline, customer retention, and steady reinvestment. Over time, that turns a collection of niche businesses into a compounding machine that can keep growing without needing to reinvent itself every few years.
The Canadian stock’s performance reminded investors that even great compounders wobble. At writing, shares of the Canadian stock are actually down by 25%, coming after long-time CEO and found Mark Leonard stepped down from the top spot. That wide range tells you sentiment can swing sharply, usually around rates, deal flow, or any hint that growth might slow. For patient investors, those swings can be the entry points.
The thing is, the business hasn’t changed. In its third quarter ended September 30, 2025, Constellation reported revenue of US$2.9 billion, up 16% year over year. That growth did not come from wishful thinking. It came from acquisitions plus organic growth, which is the combination you want from a serial acquirer with a long runway.
Cash flow looked strong, too, which matters because Constellation’s whole model depends on having cash available to buy more businesses. In Q3 2025, cash flows from operations came in at US$685 million, and free cash flow available to shareholders came in at US$529 million. In short, it kept producing a lot of cash even while it kept investing for growth, and now trades at 72 times earnings, lower than usual.
The 2026 outlook comes down to one question: can it keep deploying capital at attractive returns? In Q3 2025, it completed acquisitions with total consideration of about US$415 million, and it explicitly said it aims to invest free cash flow in acquisitions that meet its hurdle rate. If deal supply stays healthy and discipline stays tight, that’s the kind of setup that can make the Canadian stock feel unstoppable again.
That’s why I can see Constellation stock as a Canadian stock that could rule them all in 2026. It sells mission-critical software in niches people underestimate, it generates real cash, and it has a long history of turning that cash into more compounding through acquisitions. The risk is that the market already knows it’s special, so a rich valuation or a slower deal environment can still cause sharp pullbacks. But if you want one Canadian name built for the long game, CSU keeps making the case.
The post This Canadian Stock Could Rule Them All in 2026 appeared first on The Motley Fool Canada.
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Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends Constellation Software. The Motley Fool has a disclosure policy.
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