2 Small-Cap Growth Stocks to Buy if You’re Feeling Bold

Small-cap growth stocks tend to entail greater capital risk, but the right stock picks can offer substantial shareholder returns.

| More on:

Many investors tend to steer clear of small-cap stocks, believing them to be more volatile, particularly during uncertain market environments. The market capitalization of a publicly traded company is always going to be a good way to determine the financial strength and the broader perception of the stock in the market.

But there are small-cap stocks that offer immense upside potential. You can find some of the top Canadian growth stocks amid small-cap stocks trading on the stock market right now. Today, I will discuss two small-cap growth stocks that you could consider buying if you are willing to stomach the inherent risk for the promise of massive upside potential.

CloudMD Software & Services

CloudMD Software & Services (TSXV:DOC) is one of the rare few tech stocks operating in the healthcare sector, making it an ideal candidate for many investors seeking small-cap stocks with the potential to deliver stellar shareholder returns. The Vancouver-based company with a $327.71 million market capitalization is relatively small, and it has declined by 55% from its October 2020 peak.

CloudMD is not a new company. It started business in 2013, but it became a publicly listed company last year when it started trading on the junior exchange. The first few months of its IPO saw the stock appreciate by over 340% before a correction that saw another spike in February 2021.

CloudMD stock is trading for $1.41 per share at writing, and it is down by 55% from its October 2020 peak. As the digitization of the healthcare industry continues, CloudMD investors could be in for explosive gains in the coming years.

Goodfood Market

Goodfood Market (TSX:FOOD) is the perfect example of a company taking advantage of the tech-based innovations revolutionizing every industry. Groceries are an essential requirement for consumers regardless of their financial situation. Goodfood Market is banking on the necessity of groceries and riding the wave of technological innovation to become a profitable business catering to its customers’ needs.

Goodfood Market stock boomed, as the pandemic took hold and rose by almost 600% from the March 2020 bottom to its January 2021 peak. At writing, the stock is trading for $8.99 per share, and it is down by almost 32% from its peak earlier this year. The $671.72 million market capitalization company could be worth investing in on the dip for substantial long-term gains.

Foolish takeaway

There is always an element of capital risk involved when you are investing in the stock market. Large-cap stocks of established companies that have been around for a long time tend to provide investors with a degree of reliability and relatively lower risk. However, the returns they can provide you might not match the potential that the right small-cap growth stocks possess in the stock market.

If you are willing to take on slightly riskier investments that could provide you with market-beating returns, picking the right small-cap growth stocks can help you achieve that goal. Goodfood Market stock and CloudMD Software & Services stock could be excellent picks for this purpose.

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 Adam Othman has no position in any of the stocks mentioned. The Motley Fool recommends Goodfood Market Corp.

More on Dividend Stocks

Train cars pass over trestle bridge in the mountains
Dividend Stocks

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

Can CNR stock continue its long-term outperformance into 2025 and beyond? Let's explore whether now is a good time to…

Read more »

coins jump into piggy bank
Dividend Stocks

The Smartest Dividend Stocks to Buy With $500 Right Now

These top dividend stocks both offer attractive yields and trade off their highs, making them two of the best to…

Read more »

Middle aged man drinks coffee
Dividend Stocks

Here’s the Average TFSA Balance at Age 35 in Canada

At age 35, it might not seem like you need to be thinking about your future cash flow. But ideally,…

Read more »

ETF stands for Exchange Traded Fund
Dividend Stocks

How to Invest Your $7,000 TFSA Contribution in 2024

Here's how I would prioritize a $7,000 TFSA contribution for growth and income.

Read more »

a man relaxes with his feet on a pile of books
Dividend Stocks

CPP Pensioners: Watch for These Important Updates

The CPP is an excellent tool for retirees, but be sure to stay on top of important updates like these.

Read more »

Technology
Dividend Stocks

TFSA Investors: 3 Dividend Stocks I’d Buy and Hold Forever

These TSX dividend stocks are likely to help TFSA investors earn steady and growing passive income for decades.

Read more »

four people hold happy emoji masks
Dividend Stocks

Love Dividend Growth? Check Out These 2 Income-Boosting Stocks

National Bank of Canada (TSX:NA) and another Canadian dividend-growth stock are looking like a bargain going into December 2024.

Read more »

An investor uses a tablet
Dividend Stocks

A Dividend Giant I’d Buy Over Enbridge Stock Right Now

Enbridge stock may seem like the best of the best in terms of dividends, but honestly this one is far…

Read more »