Every now and then, investors experience an undeniable thrill from scoring a solid return on a small-cap stock investment.
While household names make great headlines, much of the real investment action can be found in small-cap stocks. Canada is blessed with a diverse economy and a wide number of opportunities for investors.
Small-cap stocks typically have a market capitalization between C$300 million and C$2 billion. They represent companies in the early stages of growth, making them attractive for investors looking for significant returns.
To assist your investment journey, let’s look at 10 Canadian small-cap stocks that have stood out among our editorial coverage for their growth potential.
Supremex manufactures envelopes and packaging products. With the increasing demand for e-commerce and direct mail marketing, Supremex has expanded its product lines to meet these needs. The company’s investment in sustainable packaging solutions also positions it well for growth as businesses shift towards eco-friendly practices.
Independent international energy company, Gran Tierra Energy explores opportunities in oil and natural gas production in Colombia and Ecuador. Despite the volatility in the energy sector, Gran Tierra’s strategic assets in South America offer significant growth potential, particularly with the global shift towards stabilizing oil markets and energy demands.
The real estate industry is booming. Bridgemarq Real Estate Services provides brokerage services for the sector under various brand names. The company benefits from a robust Canadian real estate market and a growing network of agents. Its focus on technology and innovative marketing strategies helps maintain a competitive edge.
As the global population ages, the demand for mobility and accessibility solutions is expected to rise. Savaria designs and manufactures accessibility products, including stairlifts and home elevators. This company’s strong product portfolio and international presence position it well for long-term growth.
WELL Health Technologies operates in the digital health sector, providing telehealth services and electronic medical records solutions. The pandemic accelerated the adoption of telehealth, and WELL Health has capitalized on this trend through acquisitions and organic growth. Its innovative approach to healthcare delivery continues to drive its market expansion.
Neo Performance Materials specializes in advanced industrial materials, including rare earth products. With increasing demand for high-tech applications and renewable energy solutions, Neo is in a solid position to capitalize on the growing need for these critical materials, making it a strong contender in the materials sector.
NFI Group manufactures buses and coaches. This is one of the top names in the North American market and is on a path to benefit from the electric vehicle (EV) transition in public transportation. The company’s investment in EV technology and sustainable transport solutions aligns with global trends towards greener alternatives.
Cargojet provides time-sensitive overnight air cargo services, and the e-commerce boom has significantly increased demand for its services. Cargojet’s long-term contracts with major players such as Amazon (NDAQ:AMZN) provide stable revenue streams and growth potential as online shopping continues to rise.
Enghouse Systems provides enterprise software solutions. The company has consistently shown strong financial performance and has made strategic acquisitions to fuel growth. Its diverse portfolio spans contact centres, video collaboration and transportation, positioning it well for continued expansion in the technology sector.
Goeasy offers leasing and lending services to consumers. With a solid track record of revenue growth and profitability, Goeasy has expanded its market share in the non-prime lending sector. The company’s focus on digital transformation and customer-centric services bodes well for future growth.
Where to invest
To effectively invest in Canadian small-cap stocks, it is crucial to choose the right brokerage platform. Three popular options are Questrade, Wealthsimple and Interactive Brokers.
Setting up an account
Questrade: Known for its low fees and extensive research tools, Questrade is a favourite among Canadian investors. Setting up an account is straightforward. Start by visiting the Questrade website and selecting the account type that best suits your investment goals (e.g., TFSA, RRSP, or a standard trading account). You wll need to provide personal information, such as your social insurance number and banking details. After verifying your identity, you can fund your account through a bank transfer or bill payment option.
Wealthsimple: Wealthsimple offers a user-friendly interface and commission-free trading, making it ideal for beginners. To open an account, download the Wealthsimple app or visit their website. Choose between a Wealthsimple Invest or Trade account based on your preference for managed or self-directed investments. The setup process requires basic personal information and identity verification. Funding your account is simple, with options including bank transfers and linking your bank account for direct deposits.
Interactive Brokers: Known for its comprehensive trading tools and low costs, Interactive Brokers is suitable for more experienced investors. To open an account, visit the Interactive Brokers website and select the appropriate account type. The registration process is more detailed, requiring extensive personal and financial information. After your account is verified, you can fund it through bank transfers, electronic funds transfers, or wire transfers. Interactive Brokers provides access to a wide range of markets, including Canadian small-cap stocks, with advanced tools for detailed market analysis.
Platform features
Questrade: Questrade offers a robust trading platform with advanced charting tools, real-time market data and a variety of research resources. Investors can access market research reports, analyst ratings and various educational materials to help make informed decisions.
Wealthsimple: Wealthsimple’s platform is designed for simplicity and ease of use. It provides basic charting and real-time market data, making it ideal for investors who prefer a straightforward approach. Wealthsimple also offers automated portfolio management through Wealthsimple Invest, which uses robo-advisors to create and manage a diversified portfolio based on your risk tolerance and investment goals.
Interactive Brokers: Interactive Brokers provides a powerful trading platform with extensive research tools, including access to global market data, detailed financial reports, and real-time news feeds. The platform supports a wide range of order types and offers sophisticated trading tools like algorithmic trading and options trading. Interactive Brokers is known for its low-cost structure, making it an attractive option for frequent traders.
Final thoughts on small-cap growth stocks
Investing in small-cap stocks offers a unique opportunity to capitalize on the growth potential of emerging companies. The 10 Canadian small-cap stocks highlighted above represent diverse industries with promising prospects. However, it’s important for investors to conduct thorough due diligence, considering the potential rewards and risks.
Understanding the underlying factors driving each company’s growth will enable informed investment decisions and help build a resilient portfolio.
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The material provided in this article is for information only and should not be treated as investment advice. For full disclaimer information, please click here. This content contains affiliate links for Interactive Brokers Group Inc., and Stockhouse receives payment for qualified leads.
(Top image generated with AI)