With housing in a potential bubble, groceries selling for exorbitant prices, and high-interest-rates-for-longer seeming like an increasingly likely scenario, it’s no surprise that Canadian penny stocks have fallen almost completely out of investors’ field of vision.
We can see this when we compare the MSCI Canada Micro-Cap Index‘s 11.58 per cent loss over the past year with the TSX’s 4.24 per cent gain over the same period.
This downward pressure on Canadian penny stocks has resulted in promising businesses being dragged down with the herd, opening the door for long-term allocations at deeply discounted prices.
While the average investor continues to favour cash and bonds to weather the uncertain economic climate, investors seeking outsized returns find themselves at an inflection point between fear-based undervaluations and the market’s eventual recognition of that value as the Canadian economy normalizes.
To nudge TMH readers in the right direction, here are three Canadian penny stocks we believe that hold all the elements of a moonshot investment:
Odd Burger
Odd Burger (TSXV:ODD) is a food company offering a line of plant-based protein and dairy alternatives through grocery stores and a chain of fast-food restaurants.
The company has nine restaurants operating across Canada with 15 more under construction. This is in addition to pipelines of more than 100 locations in Canada and the United States, and more than 150 locations in India and Singapore.
Odd Burger’s retail product line, Preposterous, is expected to reach all restaurant locations and select Canadian retailers this month.
According to Straits Research, the global vegan food market will grow from US$16.45 billion in 2022 to US$36.02 billion in 2031 at a CAGR of 9.1 per cent.
Q3 results suggest Odd Burger is positioning itself to capitalize on this growth with record quarterly revenue of C$860,020, its lowest quarterly loss in two years, and a healthy gross profit margin of C$234,256 (27 per cent of sales).
As an added kicker, insiders own more than 50 per cent of Odd Burger, which should put shareholders at ease in terms of management acting in their best interest.
James McInnes, Odd Burger’s co-founder and CEO, spoke with our Coreena Robertson about the company’s Q3 performance.
Odd Burger (TSXV:ODD) is down by 28.57 per cent since inception.
Click here to read Odd Burger’s latest investor presentation.