Small capitalization and value have been shown to be essential factors behind long-term stock returns, making exposure to them a must for any investor with at least a decade or two before needing their capital.
Among the companies that joined Stockhouse for interviews over the past week, three stand out for their small size and strong value propositions, providing them with demonstrated prospects for long-term growth that feel underappreciated at current share prices.
Biorem
Our first small-cap value stock pick, Biorem, market cap C$30.92 million, is a clean technology company specializing in high-efficiency air emissions control systems that eliminate odors, volatile organic compounds and hazardous air pollutants.
The company has installed more than 2,000 systems worldwide, helping municipal and industrial clients better meet their ESG targets while collecting consistent profits. Net income has been positive over the past four years, including C$2.09 million in 2020, C$1.30 million in 2021, C$1.61 million in 2022 and C$2.18 million in 2023, in addition to C$340,000 in Q1 2024.
With Biorem reaching a record backlog of about C$52 million in Q1 2024, up from C$39 million year-over-year, backed by a focus on expanding service offerings based on its technology, the company sees continued growth in revenue and profitability in its future, adding heft to the thesis that shares will build on their 462.86 per cent return since 2019.
Biorem stock (TSXV:BRM) last traded at C$1.97 per share.
Lahontan Gold
Our next small-cap value stock pick, Lahontan Gold, market cap C$16.50 million, is a mineral resource company that owns four top-tier gold and silver exploration properties in Nevada’s prolific Walker Lane.
Its flagship 26.4-square-kilometre Santa Fe mine project offers exposure to an NI 43-101 resource of 1,112,000 ounces of gold equivalent indicated and 544,000 ounces of gold equivalent inferred, years of progressive exploration results, and past production of 345,000 ounces of gold and 711,000 ounces of silver between 1988 and 1995.
Ongoing phase-I drilling at Santa Fe yielded six drill holes across 1,303 metres, with logging of drill cuttings suggesting successful gold and silver hits in the targeted intervals, setting the stage for phase-II drilling to begin this week and a preliminary economic assessment to be finalized in September.
Santa Fe is complemented by three other projects whose histories point to bright futures in terms of resource delineation and shareholder value creation:
- West Santa Fe, where a historical database outlines a shallow oxide gold and silver deposit between 0.5 million and 1 million ounces starting at surface and rock chip samples have yielded up to 2.61 g/t gold and 899 g/t silver.
- Moho, which houses multiple vein systems expected to account for more than 1 million ounces of gold equivalent combined, with one of the systems yielding intercepts as high as 12.9 g/t gold and 123 g/t silver in 2018.
- Redlich, which features a 16.5 million-ounce historic silver resource, in addition to a more than 100 m interval of mineralized breccia averaging 17 g/t silver equivalent with more than 2,000 m in untested strike length.
Despite delineating a million-ounce resource and developing value-added satellite properties positioned for positive news flow, shares of Lahontan Gold have given back 80.26 per cent since inception in 2022, with most investors running for the hills from inflationary pressures instead of capitalizing on their wide disparity between price and value.
Lahontan Gold stock (TSXV:LG) last traded at C$0.075 per share.
Theralase Technologies
Our final small-cap stock with a convincing case for value is Theralase Technologies, market cap C$43.41 million, a clinical-stage drug developer focused on photo-dynamic compounds, which can be formulated into drugs and activated by light or radiation to destroy various cancers, bacteria and viruses.
The company’s lead compound, Ruvidar, has had the most success as a potential treatment against early-stage bladder cancer, as highlighted by phase-II results coming out ahead of FDA-approved products already on the market (slides 19-20), nudging Theralase a step closer to setting a new standard of care in a US$1.1 billion market (slide 8).
Ruvidar’s promise for bladder cancer patients is in addition to positive results against lung cancer and various viruses such as H1N1, coronavirus, Zika and herpes, granting the company a promising shot at a king-making drug should all go as planned, with FDA approval for bladder cancer treatment estimated for 2026.
Even though Theralase began clinical trials for Ruvidar back in 2018 and the compound has been shown to outperform approved competitors such as Keytruda, which is generating tens of billions in revenue, Theralase stock (TSXV:TLT) has given back 58.51 per cent since 2019, last trading at C$0.19 per share, gifting perceptive investors with a price-value dislocation set up for multi-bagger returns.
Join the discussion: Find out what everybody’s saying about these small-cap value stocks on the Biorem Inc., Lahontan Gold Corp. and Theralase Technologies Inc. Bullboards, and check out Stockhouse’s stock forums and message boards.
This is sponsored content issued on behalf of Biorem Inc., Lahontan Gold Corp. and Theralase Technologies Inc., please see full disclaimer here.
(Top photo of 2021 drilling at Lahontan Gold’s Santa Fe project: Lahontan Gold)