Investing.com -- Stifel has identified Canada's Arctic defense initiative as a major investment opportunity as the country increases military spending to meet NATO targets.

Canada plans to raise defense spending above 2% of GDP and aims to reach 5%, or approximately C$150 billion annually, by 2035. The increase comes as geopolitical tensions have pushed NATO member countries to expand their defense budgets.

The Canadian government's "Build the North" initiative allocates more than C$40 billion for military infrastructure in the Arctic region. The funding will support military bases, airports, highways, ports, power systems, communications networks, and surveillance and strike capabilities.

Stifel views Canada's first Defense Industrial Strategy and its ten sovereign capabilities as a framework for long-term sector development. The firm plans to release a series of notes on themes related to the Defense Industrial Strategy.

The brokerage cited Russia's Arctic strategy as both a catalyst and model for Canada's plans, noting its integrated defense-economic structure.

Stifel identified several companies positioned to benefit from the Arctic defense spending. For multiple exposures, the firm highlighted Centerra Gold. For communications, it named MDA and Telesat. Bombardier, CAE, Chorus Aviation, and Fleet Space Technologies were cited for surveillance capabilities.

Infrastructure opportunities include Aecon Group, Atrium Mortgage Investment, Bird Construction, Russel Metals, Stantec, and WSP Global. For mineral extraction, Stifel listed Agnico Eagle Mines, B2Gold, and Western Copper and Gold.