A look at some small-cap stocks making news - or about to
Canada’s S&P/TSX Small Cap Index TXTW-I is up by about 40 per cent over the past 52 weeks as of Thursday’s close. It hit a record of 1,156.46 on Thursday. The Russell 2000 in the U.S. is up 12 per cent over the past 52 weeks. It hit a record 2,501.92 on Oct. 6.
Small-cap spotlight
MTY Food Group Inc. (MTY-T) shares were down in early Friday trading after the company reported a drop in same-store sales growth and profit and said macroeconomic and policy-related uncertainties “could affect performance,” including the possibility of a prolonged U.S. government shutdown.
Before markets opened on Friday, the company behind restaurants such as Jugo Juice and Mr. Sub, reported revenue of $297-million in the third quarter ended Aug. 31, up from $292.8-million for the same time last year. The result beat expectations of $295.3-million, according to S&P Capital IQ estimates.
Same-store sales fell 1.6 per cent during the quarter. By region, Canada fell by 0.3 per cent, the US dropped 2.5 per cent, while international saw an increase of 0.8 per cent, the company stated.
Net income fell to $27.9-million or $1.22 per share compared to $34.9-million or $1.46 per share a year ago. Adjusted EPS of $1.19 was the same as last year. The expectation was for adjusted EPS of $1.24.
Adjusted EBITDA increased by $2.1-million year-over-year to reach $74-million, primarily due primarily to the recognition of a $5.8-million employee retention credit received from the U.S. government during the quarter. The result exceeded expectations of $70.9-million.
“While Q3 reflected ongoing macroeconomic volatility, we are encouraged by the sequential improvement at some of our larger banners, including Cold Stone Creamery and Wetzel’s Pretzels,” said CEO Eric Lefebvre in a release. “These results support our confidence in the resilience of our brands, and we remain focused on executing initiatives that will strengthen our position as conditions improve.”
MTY said it opened 96 locations in the quarter and closed 81 others for a net positive store growth of 15 locations.
“Positive net store openings this quarter demonstrate the demand for our leading concepts and the outstanding execution of our teams. These new locations reinforce our brand strength and position us for continued financial growth,” Mr. Lefebvre said.
In its outlook, the company warned that “certain macroeconomic and policy-related uncertainties could affect performance” including a prolonged U.S. government shutdown, the availability and timing of small business administration loan funding – which could slow the pace of new restaurant openings – and potential disruptions in supplemental nutrition assistance program benefits “could negatively affect discretionary spending for some consumers, which may impact sales in banners serving value-oriented guests.”
The company said it has only seen “modest direct impacts from tariffs” because it primarily sources products domestically, which helps limit potential exposure.
“Management expects stability in normalized adjusted EBITDA margins across all three of its segments, though the company may experience some fluctuations in corporate store margins, such as this quarter,” it stated in a release. “Overall, management remains confident about its ability to drive margin improvement through positive unit growth, enhanced efficiencies, and an ongoing reduction in the number of less profitable corporate stores.”
The company also said it expects to drive strong free cash flows in 2025, “supported by lower capex over [the] prior year.”
Small-cap summary
Other small caps making news this week
Richelieu Hardware Ltd. (RCH-T) stock closed up 4.5 per cent on Thursday and were higher in early Friday trading after the retailer reported third-quarter earnings that beat expectations.
The Montreal-based company reported sales of $499.2-million for the quarter ended Aug. 31, up from $467.7-million for the same period a year ago.
The company said 4.1 per cent of the sales growth came from internal growth and 2.6 per cent from acquisitions. The expectation was for sales of $496.2-million for its third quarter ended Aug. 31, according to S&P Capital IQ estimates.
“Internal growth in the U.S. manufacturers’ market was supported by higher selling prices,” the company stated. “Part of this internal growth came from price adjustments applied to reflect the new tariffs, representing essentially a cost pass-through with no impact on gross margin.”
It said overall sales in Canada remained stable, “reflecting good performance in the Eastern manufacturing markets, offset by a decline in Ontario due to a more challenging economic environment.”
Net earnings of $23.9-million were up 5.2 per cent from the third quarter of 2024. Net earnings per share came in at 43 cents per share versus 41 cents a year ago. The result beat expectations of 41 cents.
National Bank Financial analyst Zachary Evershed lowered his target price to $35 from $37 after the earnings report, citing lower margin forecasts in 2026.
“Looking further out... Richelieu still requires a recovery in end market demand to see a more material improvement in margins, without which management indicated the current trend was likely to continue into next year,” he wrote in a note. “To err on the side of conservatism, we trim our margin estimates in 2026e to 11.4 per cent (was 11.9 per cent), closer in line with Q3, though still modestly above guidance.
He also maintained his “sector perform” (hold) rating, adding that the company “already trades at a fulsome valuation while U.S. end markets (and Ontario) remain in the doldrums.”
CIBC analyst Hamir Patel maintained his “neutral” rating and $37 price target “given sluggish housing market conditions that will likely constrain margin expansion next year.”
He also wrote that “over the medium term, we believe RCH is well positioned to gain market share, while executing on an attractive M&A pipeline (targeting adding $100MM+/year of revenues).”
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Tilray Brands Inc. (TLRY-T) shares closed up 22 per cent on Thursday, but then slipped in early Friday trading, after the cannabis company reported record first-quarter revenue and said it swung to a profit in the period ended Aug. 31. The results also beat expectations.
Before markets opened on Thursday, the company reported revenue of US$209.5-million in the first quarter, up from US$200-million a year ago. The result was ahead of expectations of US$205.8-million.
Adjusted net income increased to US$3.9-million or nil per share compared to adjusted net loss of US$6.1-million or a penny US per share a year ago.
“As we enter fiscal 2026, Tilray’s first quarter results underscore the effectiveness of our strategic vision and disciplined execution,” stated CEO and chairman Irwin Simon.
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Linamar Corp. (LNR-T) announced after markets closed on Thursday that it’s buying “select assets” of Aludyne Inc.’s North American operations for US$300-million. Aludyne is a supplier specializing in lightweight aluminum chassis and structural technologies.
Linamar said the deal “significantly expands” its manufacturing footprint across North America, notably in the U.S.
“The addition of U.S.-based manufacturing assets is expected to further strengthen Linamar’s ability to support customers locally, which is increasingly important in today’s dynamic global trade environment,” the company stated. “A diversified geographic footprint ensures resilience and flexibility in responding to evolving geopolitical and regulatory frameworks, while maintaining high standards of quality and delivery.”
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Velan Inc. (VLN-T) reported lower sales and a wider loss for its second quarter.
After markets closed on Thursday, the industrial valve maker reported sales of US$67.6-million, down from US$77.7-million last year, “reflecting the rescheduling of more than US$12-million in sales to later in the fiscal year, largely related to customer changes in delivery schedules, and the disruptive effects of ongoing changes in global tariff schemes.”
Its net loss of US$1.7-million or 8 cents per share widened compared to a net loss of US$1.2-million or 5 cents a year ago.
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Fiera Capital Corp. (FSZ-T) is locked in a legal battle with its recently terminated infrastructure head, with both sides suing each other after years of poor fund performance and investor redemption requests.
Read the full Globe story here
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Dye & Durham Ltd. (DND-T) is adopting a poison pill to prevent a “creeping” takeover bid after former CEO Matthew Proud offered to buy the embattled legal software company for $10.25 a share in a complex deal backed by his brother and former chairman Tyler Proud and former board member Ronnie Wahi.
Read the full Globe story here
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There’s a déjà vu experience playing out at Corus Entertainment Inc. (CJR-B-T) as lenders to the Global Television Network’s parent try to fix a broken balance sheet at one of the country’s largest media companies.
Many of Bay Street’s top restructuring experts working on a debt-for-equity swap that will restructure $1.1-billion in debt at the radio and TV station owner are wrestling with financial problems at these properties for the second or third time in two decades.
Read the full Globe story here
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Firan Technology Group Corp. (FTG-T) shares were down 8 per cent on Thursday after the company reported results that missed expectations.
The company said revenue of $47.7-million was 10.8-per-cent higher than the same quarter last year, while adjusted net earnings rose to $3-million or 11 cents per share versus $2.8-million or 11 cents a year ago.
The consensus expectation, based on three estimates, was revenue of $48.3-million and earnings of 12 cents per share, according to a note from Acumen Capital analyst Jim Corcoran.
He said the earnings were roughly in line with his estimates.
“The acquisition of FLYHT added $4.9M and was partially offset by lower simulator sales of $1.1M,” he wrote in a note on Oct. 9. “Recall, simulator sales tend to be lumpy.
In a second note on Friday, Mr. Corcoran, who has a “buy” and $15 target on the stock, described the selloff as “overdone.”
He wrote that “Organic growth was obscured by (1) seasonal softness (due to summer holidays), (2) lower simulator sales (historically lumpy), and (3) production shifts to mitigate tariff risk and maximize utilization (largely completed in the quarter). We believe operational momentum continues to build.”
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Cascades Inc. (CAS-T) announced on Wednesday an agreement to sell its Mississauga-based flexible packaging plant activities to Houston-based Five Star Holding for $31-million. Cascades said it will retain ownership of the site’s real estate.
“Today’s decision will allow us to reduce our debt and support the optimization of our operational platform to grow our strategic sectors,” stated CEO Hugues Simon.
“Interestingly, CAS has opted to retain the real estate in Mississauga, a 34,500 square foot facility (and 13,000 square foot warehouse) which opened in 2008 and was acquired by Cascades in 2010,” National Bank Financial analyst Zachary Evershed said in a note.
“While the company has sold a few properties since we outlined its holdings, the hidden value of its real estate portfolio remains significant. We also note that in Q2, CAS announced the closure of its Niagara Falls Containerboard facility with no mention of any intentions for the underlying real estate, leaving the door open for another potential monetization event."
Mr. Evershed has a $10 price target and “sector perform” recommendation “as we await a clearer inflection in packaging, currently mired in a tepid demand environment.”
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Kits Eyecare Ltd. (KITS-T) reported preliminary third-quarter earnings before markets opened Tuesday.
The Vancouver-based company said revenue grew 25.1 per cent year-over-year to approximately $52.4-million. New customers increased year-over-year by 27.6 per cent to approximately 99,000.
“Kits delivered strong results while navigating multiple complexities, including border changes and postal strikes,” CEO Roger Hardy stated in a release.
Canaccord Genuity analyst Luke Hannan reiterated his “buy” recommendation and $23 target price following the release of the preliminary earnings results.
He said the revenue compared to Canaccord’s estimate of $53-million and consensus of $53.1-million, “landing at the low end of the $52–$54 million guidance range."
He said the adjusted EBITDA margin of 5.2 per cent came in below his estimate of 5.5 per cent and the consensus of 6 per cent.
“Given the strength of the stock in recent weeks and preliminary Q3/25 earnings results coming in at the low end of company guidance (albeit impacted by transitory issues, in our view), we believe the stock could be under modest pressure this morning,” he wrote in a note before markets opened on Wednesday (the stock closed down 7 per cent that day).
“With that said, we believe it’s prudent for investors to recall that KITS can be relatively flexible in managing through a cautious geopolitical backdrop,” he wrote. “Recall that management has laid out plans to mitigate frictions related to tariffs/changes in de minimis exemption rules by establishing a ‘microlab facility in the U.S., relocating select optical lab equipment from Vancouver and setup to be complete within roughly one quarter without material changes to capex.”
He also wrote that the company was able to generate enough free cash flow to “modestly strengthen the balance sheet QoQ [quarter over quarter], speaking to the resilience of its business model, in our view.”
The company plans to report official third-quarter results in November.
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Calian Group Ltd. (CGY-T) will be under new leadership by the end of the year, as the company wraps up an internal audit and faces headwinds from an activist investor pressing it to refocus its business.
Kevin Ford will retire from his role as chief executive officer after 10 years, capping off 15 years with the company. Patrick Houston, current chief financial officer and chief development officer, will take his place effective Jan. 1, 2026. A new CFO will be hired to replace Mr. Houston.
The shakeup is happening at the same time as a campaign by activist investor Matt Proud, who owns a 5-per-cent stake in Calian through his private holding company Plantro Ltd., to have the Ottawa-based business sell its underperforming IT and cyber solutions (ITCS) division.
Read the full Globe story here
Canaccord Genuity analyst Doug Taylor wrote in a note that the news comes as Calian “streamlines its business model around growing its defence vertical exposure.”
Added Mr. Taylor: “We view Mr. Houston’s appointment as a logical one, given his multi-year tenure at Calian and expertise in M&A and corporate development. Accretive M&A, non-core asset divestments, and defence-related growth reacceleration represent material future catalysts for the story.” He reiterated his “buy” recommendation and $60 price target.
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Profound Medical Corp. (PRN-T) shares rose earlier this week after the company announced preliminary third-quarter results, including revenues of US$5.2-million to US$5.3-million, representing revenue growth of between 84 and 87 per cent, up US$2.8-million in the same three-month period a year ago.
The company, which makes AI-powered, incision-free therapies for the ablation of diseased tissue, said gross margin is expected to be approximately 72 per cent for the third quarter ended Sept. 30, compared to 64 per cent in the prior-year period.
The company plans to release final results on Nov. 13.
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Titan Mining Corp. (TI-T) shares rose earlier this week after the company announced that the Export-Import Bank of the United States has “expressed financing interest” of up to US$120-million under its “Make More in America” initiative. The financing is for the construction of Titan’s Kilbourne Graphite Project in St. Lawrence County, New York.
The company is a zinc concentrate producer in upstate New York and an emerging natural flake graphite producer.
The TSX-listed company said it’s collaborating with the administration and other U.S. government agencies such as the Department of War and the Department of Energy for “coordinated participation” in its critical-minerals plan through “strategic funding, inclusion as a key stakeholder and policy programs incentivizing domestic production and secure resilient supply chains.”
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The U.S. government has landed a sizable equity stake in Canadian junior miner Trilogy Metals Inc. (TMQ-T) as part of an aggressive push by the Trump administration to bolster national security by improving American access to key critical minerals.
Vancouver-based Trilogy in a release late Monday said the U.S. government will pay US$35.6-million to buy 16.4 million shares at US$2.17 apiece for a 10-per-cent stake. It will also have the right to acquire millions of additional shares over a 10-year period at the nominal exercise price of 1 US cent a share, contingent on the company building an access road into its minerals project in Alaska.
Trilogy shares surged more than 200 per cent on Tuesday after the news.
Read the full Globe story here
“While we expect elevated volatility and heavy attention as generalists pile in near term, there is some recent precedent for policy shifts and direct equity investments that have led to material re-ratings that have held so far,“ National Bank Financial analyst Rabi Nizami wrote in an Oct. 7 note. “We cite recent U.S. government equity entries into MP Materials (+148%), Lithium Americas (+175%) and Intel (+50%). We expect a similar response for TMQ shares in the near term. In terms of [the] magnitude of expected outperformance today, we would not be surprised to see shares trading in the C$7-10range, with further uplift over a longer period of time, as observed to date in these precedents.”
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Primaris REIT (PMN-UN-T) announced it’s buying Promenades St-Bruno in Montreal, Que. from Cadillac Fairview for $565-million in cash and equity.
“The acquisition further builds Primaris’ track record of successfully acquiring market-leading shopping centres in growing Canadian markets,” the company stated.
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Precision Drilling Corp. (PD-T) announced that Carey Ford has been appointed as president and CEO and member of the board. He succeeds Kevin Neveu, who has retired after serving in the roles in 2007.
Mr. Ford has been with the company since 2011 and has served as chief financial officer since 2016.
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Tornado Infrastructure Equipment Ltd. (TGH-X) announced it’s being taken over by The Toro Company for $1.92 per share. The all-cash transaction is valued at $279.3-million.
It said value represents a premium of approximately 43.7 per cent to the 12-month volume-weighted average trading price as of Oct. 3, the last trading day before the transaction was announced.
Tornado says the review comes after an eight-month strategic review process.
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Predictive Discovery Ltd. (PDI) of Australia is buying Quebec-based Robex Resources Inc. (RBX-X) to create “West Africa’s next mid-tier gold producer by combining two of the continent’s largest, lowest-cost, and most advanced projects.”
As part of the proposed deal, Robex shareholders will receive 8.667 PDI Shares for each Robex share. The companies said all directors and certain executive officers of Robex, as well as two of Robex’s largest shareholders, which collectively own approximately 25.5 per cent of Robex’s outstanding common shares, have entered into voting support agreements with PDI.
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Upcoming small-cap earnings:
Oct. 17: A&W Food Services of Canada Inc. (AW-T)
Oct. 22: Precision Drilling Corp. (PD-T)
Oct. 23: Hammond Power Solutions Inc. (HPS-A-T)
Oct. 27: Morguard North American Residential REIT (MRG-UN-T)
Oct. 29: Aecon Group Inc. (ARE-T), Morguard REIT (MRT-UN-T), Allied Properties REIT (AP-UN-T), Primaris REIT (PMN-UN-T)
Oct. 30: Secure Waste Infrastructure Corp. (SES-T), Black Diamond Group Ltd. (BDI-T), Spin Master Corp. (TOY-T), Coveo Solutions Inc. (CVO-T)
Nov. 3: BTB REIT (BTB-UN-T), Ag Growth International Inc. (AFN-T), Gibson Energy Inc. (GEI-T), CT REIT (CRT-UN-T)
Nov. 4: Minto Apartment Real Estate Investment Trust (MI-UN-T), Parex Resources Inc. (PXT-T), Cargojet Inc. (CJT-T)
Nov. 5: Curaleaf Holdings Inc.(CURA-T), BSR REIT (HOM-U-T), Killam Apartment REIT (KMP-UN-T), Canada Packers Inc. (CPKR-T), First Capital REIT (FCR-UN-T), Russel Metals Inc. (RUS-T), Alaris Equity Partners Income Trust (AD-UN-T), Badger Infrastructure Solutions Ltd. (BDGI-T)
Nov. 6: Dentalcorp Holdings Ltd. (DNTL-T), Canfor Corp. (CFP-T), Canfor Pulp Products Inc. (CFX-T), Cascades Inc. (CAS-T), Pason Systems Inc. (PSI-T), Interfor Corp. (IFP-T), Enerflex Ltd. (EFX-T), TerrAscend Corp. (TSND-T), Lightspeed Commerce Inc. (LSPD-T), NFI Group Inc. (NFI-T), Slate Grocery REIT (SGR-UN-T), Source Energy Services Ltd. (SHLE-T), Cineplex Inc. (CGX-T)
Nov. 7: Chorus Aviation Inc. (CHR-T), Boralex Inc. (BLX-T), Exchange Income Corp. (EIF-T)
Nov. 11: Extendicare Inc. (EXE-T)
Nov. 12: Pollard Banknote Ltd. (PBL-T), Bird Construction Inc. (BDT-T)
Nov. 13: Superior Plus Corp. (SPB-T), Total Energy Services Inc. (TOT-T), Profound Medical Corp. (PRN-T), AutoCanada Inc. (ACQ-T), Ballard Power Systems (BLDP-T), KP Tissue Inc. (KPT-T)
Nov. 14: Conifex Timber Inc. (CFF-T), Neo Performance Materials Inc. (NEO-T)
Nov. 20: Real Matters Inc. (REAL-T)