Got $1,000? Buy These 3 Canadian Small-Cap Stocks for Superior Returns

These three small-cap stocks could deliver superior returns in the long run, given the favourable industry trend and their growth initiatives.

| More on:

Small-cap stocks offer significant growth prospects but are highly volatile, as market fluctuations significantly impact these companies. So, young investors who have a longer investment horizon and greater risk-taking abilities could invest in these companies to earn superior returns. So, if you have higher risk-taking ability, here are three Canadian small-cap stocks that you can buy right now to earn lofty returns in the long run.

Goodfood Markets

Goodfood Market (TSX:FOOD) is an online grocery company that delivers fresh meal solutions and groceries across Canada. The pandemic has brought in some permanent changes to consumer behaviours, such as increased adoption of online shopping, which could benefit Goodfood Market. Given the accessibility and convenience of online shopping, I expect the demand for the company’s services to sustain, even in the post-pandemic world.

Meanwhile, Goodfood Market is broadening its product offerings, increasing the speed of the delivery, and expanding its footprint to capture the expanding markets. Its growing customer base and investment in automation bode well with its growth prospects. Meanwhile, the company has collaborated with Microsoft to develop artificial intelligence projects that could enhance its overall supply chain planning and execution.

However, amid the selloff in the tech space, the company is trading 49.5% lower than its January highs. So, given the company’s high-growth prospects, I believe investors should utilize this correction to accumulate the stock to earn superior returns.

HEXO

Amid the expanding cannabis market, I have chosen Hexo (TSX:HEXO)(NYSE:HEXO) as my second pick. Although the company’s third-quarter performance was lower than expected, its acquisitions are significant growth drivers. Meanwhile, HEXO completed Zenabis Global’s acquisition earlier this month. This acquisition has made HEXO one of the three top players in the Canadian recreational cannabis market. It provides immediate access to the European medical cannabis market while delivering $20 million in savings within the next year due to synergies.

Meanwhile, HEXO is also working on completing the acquisition of 48North and Redecan, making HEXO the number one licensed producer in the Canadian recreational market. Along with the expansion of its product portfolio, the acquisition could also improve HEXO’s profitability due to Redecan’s lean production capabilities.

The company is expanding its operations in the lucrative U.S. market through a production facility in Colorado. So, the company is well equipped to capture the expanding cannabis market.

Savaria

Savaria (TSX:SIS) is a $1.26 billion company involved in producing and marketing accessibility solutions. Supported by its solid first-quarter performance and accretive acquisition of Handicare, its stock price has increased by 35.4% this year. However, its valuation still looks attractive, with its forward price-to-sales and forward price-to-earnings multiples standing at 1.8 and 24.7, respectively.

The demand for the company’s services could rise amid the increasing aging population and rising income. Further, Handicare sells its products in 40 countries and earns 89% of its revenue from Europe. So, the acquisition could diversify Savaria’s revenue streams and boost its distribution network outside North America.

The acquisition also provides cross-selling opportunities while improving product innovation and production efficiency. So, the company’s growth prospects are looking healthy. Meanwhile, Savaria also rewards its shareholders with monthly dividends. Its forward dividend yield currently stands at a healthy 2.45%.

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.

Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool owns shares of and recommends Microsoft. The Motley Fool recommends Goodfood Market Corp, HEXO Corp., and Savaria Corp. Fool contributor Rajiv Nanjapla has no position in any of the stocks mentioned.

More on Tech Stocks

A data center engineer works on a laptop at a server farm.
Tech Stocks

3 No-Brainer Data Centre Stocks to Buy With $500 Right Now

Data centres are going to be a huge growth opportunity in the next decade. And these are the top buys.

Read more »

The virtual button with the letters AI in a circle hovering above a keyboard, about to be clicked by a cursor.
Tech Stocks

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

OpenText stock has fallen in the last few years, but that could mean this top tech stock remains an undervalued…

Read more »

AI microchip
Tech Stocks

Celestica Stock: Buy, Sell, or Hold?

Celestica's stock price has rallied 950% in the last five years. Will the AI boom send it even higher in…

Read more »

data analyze research
Tech Stocks

2 Ridiculously Cheap Growth Stocks to Buy Hand Over Fist in 2024

Well Health Technologies is a cheap growth stock to buy for its record-breaking results, massive revenue growth, and profitability.

Read more »

A worker uses a double monitor computer screen in an office.
Tech Stocks

4 Reasons to Buy Kinaxis Stock Like There’s No Tomorrow

Kinaxis stock has a strong past. But there is even more to look forward to from this top tech stock.

Read more »

The letters AI glowing on a circuit board processor.
Tech Stocks

The Future of AI: Best Canadian Stocks to Buy Now

Here are two of the best AI-focused stocks in Canada that you can consider adding to your portfolio before it’s…

Read more »

TFSA (Tax-Free Savings Account) on wooden blocks and Canadian one hundred dollar bills.
Tech Stocks

2 TFSA Stocks to Buy Right Now With $7,000

Are you looking for growth stocks that can help you maximize the tax-free withdrawals of the TFSA? This article is…

Read more »

cloud computing
Tech Stocks

3 No-Brainer Tech Stocks to Buy Right Now for Less Than $1,000

Not all tech stocks are the risky investments that many think they are. Which is why we're focusing on the…

Read more »