5 Small-Cap Conviction Stocks to Buy Now

Royal Bank of Canada (TSX:RY)(NYSE:RY) put out its RBC Canadian Small-Cap Conviction List recently. These five are worth putting on your watch list.

| More on:

Royal Bank of Canada (TSX:RY)(NYSE:RY) put out its quarterly Small-Cap Conviction List, a group of 20 small-cap stocks it feels will outperform over the next 12 months.

Well, for one thing, they tend to be followed by fewer analysts, money managers, and retail investors, which means they tend to move higher when good news comes out. Of course, that is a double-edged sword with lousy news having the reverse effect, sending them lower.

That’s why it’s helpful to have a list like RBC’s to cut to the chase a little bit.

Since 2013, its list has delivered a total return of 125% — significantly higher than the 44% of the S&P/TSX Small-Cap Index Total Return and 58% total return for the TSX Composite Index.

Here are the five stocks I believe are the cream of the small-cap crop. Year to date through July 9, they’ve averaged a total return of 10.2%.

Over the next week, I’ll cover each of them in more detail.

Cargojet Inc. (TSX:CJT) not only made the bank’s small-cap conviction list, but the air cargo company also got on to RBC Dominion Securities’s “Imagine 2025” list, a group of 69 stock recommendations — one of only 12 Canadian companies — that will benefit from changing technology over the next seven years, leading to superior returns.   

Enercare Inc. (TSX:ECI) operates several businesses, but its largest — Home Services — provides water heater rentals to 1.1 million customers in Canada and the U.S. It has excellent recurring revenue from renters who shell out more than $24 a month to be able to have a hot shower.

Kinaxis Inc. (TSX:KXS) is an Ottawa-based company that provides logistics and supply-chain software via monthly subscription over the cloud to large and mid-sized companies in need of its industry-leading software. It’s a comer.

Tricon Capital Group Inc. (TSX:TCN) is a real estate investment manager based in Toronto that invests in commercial and residential real estate, including the burgeoning single-family residential rental market in the U.S. It invests alongside its asset management clients, so it’s got real skin in the game. It’s one of my favourite TSX stocks; I could go on forever about its business.

Great Canadian Gaming Corp. (TSX:GC) was a good stock to own entering 2017. After the 18 months it’s had since then, it’s fair to say it’s now a great company with major GTA casino projects to keep it busy for years to come. One of two exciting Canadian gambling stocks, investors have a real opportunity for gains over the next three to five years.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Will Ashworth has no position in any stocks mentioned. Kinaxis and Tricon are recommendations of Stock Advisor Canada.

More on Investing

An investor uses a tablet
Investing

4 Value Stocks That Are Must Buys for Canadians in November

Whether you want to add growth or defence to your portfolio, these four stocks are some of the best Canadian…

Read more »

Oil industry worker works in oilfield
Energy Stocks

Is Suncor Stock a Buy, Sell, or Hold for 2025?

Suncor stock looks undervalued as the company continues to increases cash flows, earnings, and shareholder returns.

Read more »

monthly desk calendar
Dividend Stocks

This 7.8% Dividend Stock Pays Out Every Month

Not all monthly dividend stocks are created equal. And this top stock is certainly a strong choice for passive income.

Read more »

Canada national flag waving in wind on clear day
Investing

Top Canadian Small-Cap Stocks to Buy Now

These top Canadian small-cap stocks offer higher growth potential and could deliver stellar returns over time.

Read more »

A worker gives a business presentation.
Dividend Stocks

Is TMX Group Stock a Buy, Sell, or Hold for 2025?

TMX Group (TSX:X) stock has been a consistent wealth-builder, generating 4,630% in total returns since 2002. Should you buy, sell,…

Read more »

calculate and analyze stock
Tech Stocks

1 Stock That’s Just as Hot as Nvidia (Without All the Hype)

Nvidia stock may look like a strong option, but its valuation is through the roof. Enter this other under-the-radar stock.

Read more »

Man data analyze
Dividend Stocks

2 Deeply Undervalued Dividend Stocks to Buy in November

Here are two stocks that I view as deeply undervalued this November.

Read more »

Dividend Stocks

The 2 Best Canadian Blue-Chip Stocks to Buy Now

Blue-chip stocks can be some of the best stocks to have in any portfolio. But when they're trending upwards, investors…

Read more »