A look at some small-cap stocks making news - or about to
Canada’s S&P/TSX Small Cap Index TXTW-I hit a record high of 1,042.19 on Friday and is up about 35 per cent over the past 52 weeks. The Russell 2000 in the U.S. is up about 15 per cent over the past 52 weeks.
Small-cap spotlight
ADF Group Inc. (DRX-T) shares closed down 10.5 per cent on Thursday after the Quebec-based company reported a drop in second-quarter earnings, citing the impact of U.S. tariffs. An analyst said in a note that the tariffs “have placed a temporary halt” on the company’s strong growth track record, but expects “significant tailwinds” from government infrastructure spending and non-residential construction growth.
Before markets opened on Thursday, the maker of industrial coatings and steel structures reported revenues of $53-million for the quarter ended July 31, down from $74.9-million for the same period a year earlier. Gross margin, as a percentage of revenue, went from 36.9 per cent to 20.7 per cent year over year, the company stated.
“These decreases, both in terms of revenues and margins, are directly attributable to the impacts of the U.S. tariffs,” the company stated. “As previously explained, and although these tariffs have limited direct impacts on the corporation’s costs, the uncertainty related to these tariffs, as well as the increase in the price of steel, had a negative impact on the corporation’s results.”
Net income of $900,000 or 3 cents per share compared with net income of $16-million or 51 cents per share.
The company said its order backlog stood at $468-million as of July 31, up 60 per cent compared with Jan. 31.
“Although the order backlog is more than adequate, the uncertainty surrounding the U.S. tariffs has caused a non-recoverable delay in fabrication hours, mainly at ADF’s plant in Terrebonne, Que.” the company stated.
“Considering that ADF’s plant in Terrebonne, Quebec, was operating with only 30 per cent of its usual workforce for almost the entire quarter ended July 31, 2025, owing to the previously announced Work-Sharing program, we were able to generate positive net results while maintaining a healthy financial position,” stated chairman and CEO Jean Paschini.
He also said the company has put in place solutions, including the recent acquisition of LAR Group, to help the company grow and diversify “in the face of the uncertainties from our U.S. markets.”
On Sept. 2, the company announced the acquisition of Quebec-based LAR Group, a designer, manufacturer and installer of mechanically welded steel structures focused on the large-scale hydroelectricity market. LAR Group also offers customized overhead crane solutions for the heavy industry. ADF paid $19-million, plus a closing adjustment linked to certain working capital expenses.
Atrium Research analyst Nicholas Cortellucci, the lone analyst covering the stock, maintained his “buy” rating and $12 target price after the earnings report.
In a note, he said the results missed his expectations: Revenue of $53-million was below his estimate of $58.2-million and EBITDA came in at $3.7-million compared to his estimate of $10-million
“Management presented a positive outlook given the excellent backlog position and balance sheet,” he wrote in a Sept. 11 note. “This combines with the proposed acquisition of LAR Group, which will diversify ADF’s revenue away from the U.S. H2 [the second half] is still poised to be strong, evident by the work-sharing program ending. We are also excited for Mark Carney’s major projects plan, reiterating Canada’s commitment to infrastructure spending.”
The analyst noted that ADF is a family-owned business with Jean, Pierre, and Marise Paschini holding 42 per cent of the shares outstanding and [more than] 80 per cent of the voting rights.
“As such, management is highly incentivized to optimize returns and not dilute shareholders,” he added.
Small-cap summary
Other small caps making news this week
Transat AT Inc. (TRZ-T) shares closed down 11 per cent on Thursday after the company behind Air Transat reported a more cautious outlook for its current fourth quarter.
Before markets opened on Thursday, the Montreal-based company reported of $766.3-million for its third quarter ended July 31, up 4.1 per cent from $736.2-million for the same period last year. The expectation was for revenue of $759.9-million.
Adjusted EBITDA was $81.2-million compared with $48-million last year driven by higher revenues, increased productivity, as well as a 14-per-cent decrease in fuel prices compared to the same quarter last year, the company stated.
Its profit was $399.8-million or $9.97 a share, compared with a loss of $39-million or $1.03 in the same period last year.
On an adjusted basis, Transat says it had a loss of 28 cents per share in its latest quarter, compared with an adjusted loss of 93 cents per share in the same quarter last year.
In the release, the company said load factors for the fourth quarter are 1.2 percentage points lower compared to the same date in fiscal 2024, while airline unit revenues, expressed as yield, are 3.1 per cent higher than they were at this time last year, “although currently trending downward.”
The company also said it expects a 1-per-cent increase in capacity, measured in available seat-miles, compared to 2024, “reflecting a modest reduction in capacity during the fourth quarter.”
CEO Annick Guérard said in a release that “economic uncertainty and capacity redeployment across the industry are posing short-term challenges for load factors, and we do not expect fuel costs to provide the same significant tailwind as they did so far this year.“
National Bank Financial analyst Cameron Doerksen maintained his “sector perform” and $3 target on the stock shortly after the earnings report.
He said the downward trend the company cited in the current fourth quarter can be partly attributed to a moderation in yields after the company benefited significantly from the Air Canada strike in August.
“However, we also suspect that AC is being aggressive with pricing as it seeks to win back customers,” he wrote. “For the winter, Transat is planning to increase capacity by 5 to 7 per cent with total industry capacity to sun destinations expected to be up [about] 10 per cent year over year. While still early in the booking curve, management remains confident that the market will be able to absorb the increase in capacity.”
He also noted that Transat is on track with an operational improvement program launched a year ago that aims to improve EBITDA by $100-million by mid-fiscal 2026 and that management indicated that it sees additional opportunities to improve overall performance beyond the initiatives already underway.
“We also continue to believe the stock will be supported as the possibility of a takeout offer from one of the company’s large shareholders remains,” he wrote in a Sept. 11 note. “Our relatively neutral stance on the stock is due to high leverage (5.3x) and a not overly compelling relative valuation.”
Desjardins Securities’ Benoit Poirier trimmed his target for its shares to $3 from $3.25, reiterating a “hold” rating.
“While we recognize TRZ’s deleveraging efforts and benefits from the Elevation Program initiatives, we maintain a cautious stance and prefer to stay on the sidelines as the effects of Canada’s economic slowdown continue to intensify. Reflecting this more conservative outlook, we forecast only a modest $35-million year-over-year EBITDA increase in FY26. That said, Pierre Karl Péladeau’s reported interest in acquiring TRZ (alongside potential support from FTQ and Investissement Québec) could offer near-term upside for the stock,” said Mr. Poirier.
Elsewhere, Scotia’s Konark Gupta bumped his target to $2.25 from $2 with a “sector underperform” rating.
Read the Globe’s full story on Transat here
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Information Services Corp. (ISC-T) shares rose this week after it announced on Monday that its board “has been undertaking a review of strategic alternatives to identify opportunities to maximize value for all shareholders.”
ISC stated that the review is considering a range of potential outcomes, including asset divestments, acquisitions, transformative business combinations, or a sale of the company.
The company also stated that Crown Investments Corp. of Saskatchewan, its largest shareholder, will consider any outcome of the review “to protect the province’s best interests and Saskatchewan jobs.”
Plantro, an activist shareholder of ISC, issued a statement on Monday that said ISC’s strategic review announcement “follows several months of public and private engagement by Plantro with ISC, the government, and fellow shareholders.”
On Thursday, ISC issued another statement citing “mischaracterizations” of its review from Plantro.
In the release, ISC says the review was initiated by ISC’s board with the support of Crown Investments Corp. of Saskatchewan. It also said that Plantro’s privately requisitioned special meeting of shareholders did not include any proposal or request for ISC to initiate a strategic review.
“The strategic review was not the result of any agreement with Plantro,” the company stated, adding that “Plantro’s assertion that its actions have led the Company to embark on a strategic review is inaccurate.”
Related: Once targeted by activist investors, Matt Proud is now a formidable shareholder gadfly himself
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Evertz Technologies Ltd. (ET-T) reported higher revenue and earnings for its first quarter ended July 31.
After markets closed on Wednesday, the audio and video software technology company reported revenue of $112.1-million, an increase from $111.6-million in the prior year. The result missed expectations of $118.1-million.
Net earnings of $11.9-million or 15 cents per share was up from $9.7-million or 13 cents a year ago. The expectation was for EPS to come in at 14 cents.
BMO analyst Thanos Moschopoulos raised his target to $14 from $13.50 and kept his “outperform” (buy) rating after the earnings.
“While top-line growth has been a challenge, we view the stock’s valuation as attractive given Evertz’s dividend yield, cash generation, gross margin, and the ongoing improvements to its revenue mix,” the analyst wrote.
Canaccord Genuity analyst Robert Young said that while revenue missed, strong gross margins from high-margin software drove EBITDA ahead of his model.
“Growth continues to be lacklustre, although we note the attractive and well funded [approximate] 6.5-per-cent dividend yield, positive commentary, and a particularly strong $41M in shipments through the first month of Q2 (August), giving us confidence in the near term,” he wrote in a Sept. 10 note. He kept his $14.25 target and “buy” rating.
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Barrick Mining Corp. (ABX-T) is selling Hemlo, its only Canadian mine, to Carcetti Capital Corp. (CART-H-X) for up to US$1.09-billion.
Toronto-based Barrick put Hemlo up for sale earlier in the year, deeming it a “non-core” asset.
Carcetti will pay Barrick US$875-million, and US$50-million in its shares upfront. Additionally, Barrick stands to receive up to US$165-million contingent on production from the mine and the price of gold over a five-year period.
Read the Globe’s full story here
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Haivision Systems Inc. (HAI-T) shares surged on Thursday after the Montreal-based company reported higher sales for its third quarter ended July 31 and broader earnings that beat expectations.
After markets closed on Wednesday, the company reported revenue of $35-million for the quarter, up from $30.6-million last year. The expectation was for revenue to come in at $33.2-million.
Adjusted EBITDA was $3.5-million compared to $4.1-million for the same prior year period.
Net income was $179,000 or a penny per share compared to $435,000 or a penny per share a year ago.
The company makes “mission-critical” real-time video networking and visual collaboration solutions.
Acumen Capital analyst Nick Corcoran upgraded the stock to a “buy” from a “hold” and increased his target to $6 from $5 after the earnings, citing “improved visibility” and momentum building in the business.
“The two-year strategic plan remains on track with double-digit organic growth,” he wrote in a Sept. 11 note. “The sales pipeline continues to grow with the number of larger opportunities also growing. This is supported by new products, such as the Kraken X1 encoder and Falcon X2 transmitter. Tariffs have had a limited impact to-date. Products manufactured in North America are covered under USMCA. Transmitters manufactured in France are subject to a US tariff. Management indicated that this has had a relatively small impact, and they are evaluating options to mitigate the impact going forward.”
Canaccord Genuity analyst Robert Young increased his target price to $5.60 from $4.50 and kept his “hold” rating but said in a note he’s “incrementally confident” about growth prospects.
“Management noted a solid increase in its long-term sales pipeline with large-scale opportunities emerging in both defence and enterprise, which account for [about] two-thirds of Haivision revenue,” he wrote in a Sept. 11 note. “Haivision underscored opportunities from expanding NATO commitments on top of strong U.S. exposure and also enterprise cybersecurity, particularly in the banking and utilities end markets.”
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D2L Inc. (DTOL-T) shares rose on Thursday after the cloud-based education software company reported second-quarter results that beat expectations.
After markets closed on Wednesday, the company reported revenue of US$54.8-million for the quarter ended July 31, up 11 per cent from US$49.2-million for the same period in the prior year, driven by subscription and support revenue. The result was above expectations of US$53.9-million.
Income was US$2.7-million or 5 cents US per share, ahead of expectations of 3 cents US and compared to a loss of about US$300,000 or nil per share a year ago.
The company increased its subscription and support revenue guidance to be in the range of $198-million to $200 million, up from $194-million to $196-million. Its total revenue and adjusted EBITDA guidance remained the same.
Canaccord Genuity analyst Doug Taylor maintained his “buy” rating and increased his target to $21 from $20 after the earnings.
“The quarter exceeded expectations, with the updated guidance mix leading to some modest tweaks in our overall forecast,” he wrote in a Sept. 11 note. “While the current growth profile is crimped at the margin by budgetary issues in several key customer segments, D2L continues to leverage its strong product leadership and competitive positioning to drive growth and operating leverage. We see further upside to the company’s valuation profile as organic ARR growth reaccelerates, likely a function of market conditions improving.”
National Bank Financial analyst John Shao noted that the stock took a brief hit earlier this year “due to macro uncertainties but quickly rebounded as the company demonstrated its resilience and solid execution through consistent growth and margin expansion.”
Mr. Shao said D2L has “increasingly looked like an ‘AI Play’ and thanks to its continued investments, this theme is now taking meaningful shape,” he wrote in a note. “The AI opportunity, coupled with other quality attributes such as strong recurring revenue and margin expansion, has far surpassed the macro concern to lead us to still rank D2L as one of our top ideas for the year.”
He has an “outperform” and $20 target on the stock.
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Currency Exchange International Corp. (CXI-T) reported higher revenue and adjusted earnings for its third quarter ended July 31.
After markets closed on Wednesday, the company reported revenue increased by 7 per cent to US$21.3-million compared to US$20-million a year ago.
Adjusted EBITDA was US$8.2-million, up 5 per cent from last year.
Net income was US$4.2-million or 66 cents US per share compared to US$4.6-million or 69 cents US a year ago.
Adjusted net income decreased 10 per cent to US$4.1 million from US$4.6 million in the prior period.
Acumen Capital analyst Jim Byrne maintained his “buy” rating and increased his target price to $30 from $28.
“We view the Q3/FY25 results as positive for the shares given the strong margin improvement relative to last year and the first half of 2025,” he wrote in a Sept. 11 note. “The company delivered strong growth in its payments business as [it focuses] on the U.S. business.
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Groupe Dynamite Inc. (GRGD-T) shares surged this week after the retailer reported a 36.5 per cent boost in sales for its second quarter and a stronger outlook. The quarterly results sailed past expectations.
Before markets opened on Wednesday, the company behind the Garage and Dynamite banners, reported revenue of $326.4-million for the quarter ended Aug. 2, up from $239.1-million a year ago. The result easily surpassed expectations of $290.7-million.
Comparable store sales rose 28.6 per cent.
Profit of $63.9-million or 56 cents per share, up from $40.4-million or 38 cents a year earlier. Adjusted EPS of 57 cents beat expectations of 44 cents and compared to 40 cents last year.
In its outlook, Groupe Dynamite says it now expects comparable store sales growth between 17 per cent and 19 per cent for its full year, up from earlier expectations for between 7.5 and 9.0 per cent.
It also raised its expectations for its adjusted EBITDA margin to between 32 per cent and 33.5 per cent, up from earlier guidance for between 30.3 per cent and 32.3 per cent.
National Bank Financial analyst Vishal Shreedhar kept his “outperform” (buy) and increased his target to $55 from $40 after the earnings.
“We maintain a favourable disposition on GRGD and top pick selection,” he wrote. “The higher PT reflects higher estimates, a higher multiple and a roll-forward of our valuation period.”
Canaccord Genuity analyst Luke Hannan reiterated his “buy” rating and increased his target price to $54 from $43.
“GRGD printed its best quarter since becoming a public company last November, with all metrics materially ahead of expectations, a sizable lift to annual comparable sales growth and adjusted EBITDA margin guidance, while leaving the door open for yet another beat and raise with its Q3/F25 results, in our view,” he wrote in a note. “Despite the stock’s run this year (up 146 per cent YTD), we continue to believe that the shares are compelling here, given GRGD’s growth prospects in the U.S/, an improving profile for both store unit economics and, by extension, returns on invested capital, and F2025 guidance that remains beatable, in our view.”
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Roots Corp. ROOT-T reported higher sales and trimmed its loss in the second quarter, results that beat expectations.
Before markets opened on Wednesday, the company reported sales were $50.8-million for its second quarter ended Aug. 2, a 6.3-per-cent increase compared to $47.7-million for the same quarter last year. The results beat expectations of $45.1-million.
Its net loss of $4.4-million or 11 cents per share was down from a loss of $5.2-million or 13 cents a year earlier. The expectation was for a loss of 14 cents in the most recent quarter.
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Soma Gold Corp. (SOMA-X) shares fell this week after the company announced a halt in its operations in Colombia due to a strike.
“The company has been engaged in good faith negotiations and recently presented a comprehensive offer that included significant increases in wages, benefits, living allowances, additional days off, and a meaningful signing bonus,” it stated in a release on Tuesday. “Nevertheless, the union declined to respond to the latest proposal and initiated strike action this morning, resulting in the suspension of operations at both the Cordero Mine and the El Bagre Gold Complex.”
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Sylogist Ltd. (SYZ-T) shares rose this week after one of its major shareholders, private investment firm OneMove Capital Ltd., announced plans to try to shake up the company’s board.
OneMove stated that it plans to requisition a special meeting of shareholders to hold the board accountable for what it alleged has been “years of value destruction” at the company. It also said it wants to nominate three independent directors to “restore discipline, accountability, and shareholder trust.”
Sylogist provides software-as-a-service to public sector companies.
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The North West Company Inc. (NWC-T) reported a small increase in sales and profit for its second quarter, as well as a 2.5-per-cent dividend increase.
Sales came in at $647-million compared to $646.5-million last year “due to an increase in Canadian sales, new stores and the impact of foreign exchange on the translation of international operations sales,” the company stated.
The expectation was for sales of $642.7-million.
Same-store sales fell 1.1 per cent year over year, compared to a year-over-year increase of 4.3 per cent for the same quarter last year.
Net earnings came in at $36.1-million or 74 cents per share compared to $35.3-million or 73 cents last year.
Adjusted net earnings of $39.6-million or 81 cents per share were above expectations of 76 cents.
“Our results this quarter reflect the significant headwinds from community evacuations due to widespread wildfires across northern Canada, a decrease in Jordan’s Principle funding and ongoing pressures from a softer economy, particularly in our Alaska markets,” said CEO Dan McConnell in a release.
He said the company’s cost-reduction initiatives helped mitigate the headwinds.
The company announced an increase in its quarterly dividend to 41 cents, up from 40 cents.
BMO Capital Markets analyst Stephen MacLeod lowered his target to $57 from $59 but kept his “outperform” (buy) rating after the earnings.
“We continue to believe the longer-term outlook remains positive,“ he said, citing in part settlement money that has started flowing into First Nations communities in recent weeks. The compensation payments are part of a $23-billion settlement for more than 300,000 First Nations children and their families.
CIBC analyst Ty Collin said in a note that the results were “better than feared considering uncertainties from Canadian wildfires, supported by solid progress on efficiency initiatives.”
However, he noted the quarter “saw the emergence of some new headwinds, including softness in Alaska and additional funding disruptions within Canada.”
Added Mr. Collin: “While these were negative updates, the core of our investment thesis is the expected benefit from the $23-billion Child Welfare settlement in Canada, which started being disbursed last month, ahead of expectations.”
He kept his “outperformer” (buy) rating and lowered his target to $58 from $59.
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Shares in MDA Space Ltd. (MDA-T) plunged this week after the company said it had lost a $1.8-billion satellite contract with U.S. telecommunications company EchoStar Corp.SATS-Q. Read the full Globe story here:
Canaccord Genuity analyst Doug Taylor said in a Sept. 8 note that MDA “maintains a strong pipeline of opportunities with other prospective customers” and that financial performance this year is “not materially impacted,” but he lowered his 2026 published estimates.
He also said the stock valuation was “compelling” after the stock drop. He maintained his “buy” rating and lowered his target to $47 from $54. Read more analyst reactions in this report
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Major Drilling Group International Inc. (MDI-T) shares slipped this week after the company reported mixed results for its first quarter.
After markets closed on Monday, the company reported revenue of $226.6-million for the quarter ended July 31, a 19.3-per-cent increase compared to the same period last year. The expectation was for revenue of $225.8-million.
EBITDA of $32.1-million was down from $34.3-million in the same period last year and below expectations of $36.8-million.
“EBITDA in the quarter was impacted by lower gross margins, reflective of the current competitive pricing environment in North America,” stated CEO Ian Ross.
Net earnings of $10.1-million or 12 cents per share were down from $15.9-million or 19 cents last year. The expectation was for EPS of 18 cents.
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Upcoming small-cap earnings:
Sept. 15: High Tide Inc. (HITI-X)
Sept. 17: Sangoma Technologies Corp. (STC-T)
Sept. 24: AGF Management Ltd. (AGF-B-T)
Sept. 25: Vecima Networks Inc. (VCM-T)
Oct. 1: Novagold Resources Inc. (NG-T)
Nov. 14: Conifex Timber Inc. (CFF-T)
-with files from Dave Leeder