A weekly look at some small-cap stocks making news - or about to.
As of market close on Thursday, March 20, Canada’s S&P/TSX SmallCap Index was up about 11.5 per cent over the past 12 months. The Russell 2000 in the U.S. was flat over the same period.
Small-cap spotlight
Here’s one small cap in Canada that investors may want to put on their radar screen
Premium Brands Holdings Corp. (PBH-T) shares jumped on Friday, despite a broader market selloff, after the specialty foods company reported record fourth-quarter earnings ahead of expectations. The company also said it’s holding off on a dividend increase given the uncertainty around tariffs.
Vancouver-based Premium Brands, the food manufacturing and distribution company behind brands such as Grimm’s Fine Foods, Hempler’s and Harvest Meats, reported record revenue of $1.64-billion for the quarter ended Dec. 28. That compared to $1.55-billion for the fourth quarter of 2023 and was ahead of expectations of $1.60-billion, according to S&P Capital IQ.
Net income was $37.3-million or 84 cents per share compared to $15-million or 34 cents a year ago.
Adjusted earnings came in at $46.3-million or $1.05 per share, ahead of expectations of 95 cents and up from $37.9-million or 85 cents per share a year ago.
The company also provided a 2025 revenue guidance range between $7.2-billion and $7.4-billion, ahead of expectations of $7-billion and an adjusted EBITDA range of $680-million to $700-million, ahead of expectations of $679.5-million.
In a recorded presentation released alongside the results, chief executive officer George Paleologou said management is holding off on increasing the company’s dividend, something he said the company has done annually for the past 10 years.
“Normally, we would be increasing our dividend rate at the start of a new year. However, for 2025, given the current uncertainty around tariffs, we decided that the prudent thing to do is to hold off until we have better clarity on how the current chaotic situation is going to settle out,” he said.
Mr. Paleologou said the company is well positioned to manage tariff impacts given its focus on manufacturing locally and regionally in the jurisdictions that it sells in.
He said the company has built “state-of-the-art capacity” in Canada to mainly service Canadian and overseas markets.
“If we had known that tariffs were imminent five years ago, we would not have acted very differently,” he said in the recorded remarks. “For this reason, we’re certain that we can manage the various risks related to this issue, and we believe that this issue will not impact us materially over the long term.”
He said the company does have some cross-border exposure between the U.S. and Canada - for example, a U.S.-based sandwich plant that exports into Canada and cooked-protein facilities in Canada that ship to the U.S.
During an analyst conference call on Friday, management was asked why the company wasn’t also pausing acquisitions alongside the dividend to reduce leverage and risk.
Mr. Paleologou called it a “fair comment” but said the company isn’t aggressive with its acquisitions, adding that recent purchases – three in December and one in March – have been “incredibly accretive” and “didn’t deteriorate the balance sheet in any way.”
He said the company is still looking for acquisitions that will help its growth.
“We’re managing the business for the long term and assessing all acquisitions in a conservative way,” he said.
In a note, Desjardins Securities analyst Chris Li, who has a “buy” and $95 target on the stock, said the outlook is “encouraging” but “the caveat is the health of the consumer due to tariffs.”
He also said management is being conservative by choosing not to increase the dividend until macroeconomic conditions improve.
Earlier this week, the company issued $150-million of convertible unsecured debentures at an annual rate of 5.5 per cent, for next proceeds of $143-million after transaction costs of approximately $7-million. It said the offering will be used to pay down debt.
The company also said it acquired Denmark Sausage, LLC for US$21-million earlier this month. Denmark has a plant in Arizona.
Premium Brands’ stock is down 6 per cent so far this year and down 14 per cent over the past 12 months. It has traded between a high of $97.10 and a low of $74 over the past 52 weeks.
Small-cap summary
Other small caps making news this week:
Knight Therapeutics Inc. (GUD-T), which recently purchased Paladin Pharma Inc., reported a jump in revenue and swung to a profit in the fourth quarter.
Before markets opened on Thursday, the specialty pharmaceutical company reported revenue of $96.9-million up from $74.2-million a year earlier and ahead of expectations of $87.6-million, according to S&P Capital IQ. The beat was partially due to hyperinflation in Argentina, analysts said.
Net income of $10.7-million or 11 cents per share compared to a loss of $24.3-million or 23 cents a year earlier.
Adjusted EBITDA was $15-million compared to $12.1-million a year earlier.
Canaccord Genuity analyst Tania Armstrong-Whitworth downgraded her rating to “hold” from “buy” and lowered her target price to $6.50 from $7.25 post earnings citing in part “subpar guidance for 2025.”
The stock is up 17 per cent so far this year and 16 per cent over the past 12 months.
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Enerflex Ltd. (EFX-T) announced after markets closed on Wednesday that its president, CEO and director Marc Rossiter had stepped down, effective immediately.
Preet Dhindsa, the senior vice-president and chief financial officer, will serve as interim CEO. Joe Ladouceur, vice-president treasury, tax and insurance, will serve as Interim CFO.
The Board is undertaking a comprehensive search to identify the company’s next CEO and has retained a leading executive search firm to assist with this process.
“As we look to the future and position Enerflex to create shareholder value over the long-term, the board decided that now is the right time to undertake a leadership transition,” stated chair Kevin Reinhart in a release.
The stock is down 25 per cent so far this year and is up about 35 per cent over the past 12 months.
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Cargojet Inc. (CJT-T) announced after markets closed on Wednesday that its chief financial officer, Scott Calver, is leaving to pursue other opportunities. Sanjeev Maini will continue in his role as Interim CFO until the company finds a replacement, which it expects to conclude later this year.
The stock is down 20 per cent so far this year and 19 per cent over the past 12 months.
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AutoCanada Inc. (ACQ-T) shares closed up 10 per cent on Thursday after the company swung to a profit in its fourth quarter compared to a year earlier.
After markets closed on Wednesday, the Edmonton-based company reported revenue of $1.26-billion, down about 1 per cent from $1.28-billion a year ago and below expectations of $1.4-billion. Net income of $7.1-million or 33 cents per share compared to a loss of $16-million or 54 cents a year earlier.
Adjusted EBITDA was $54.1-million compared to $47.9-million in the prior year and was ahead of expectations of $36-million.
The company also said it completed its strategic review, which resulted in the sale of three non-core Stellantis dealerships, the closure of all RightRide locations and a decision to divest its U.S. business.
“With this review behind us, we are now fully focused on executing our operational transformation plan,” executive chairman Paul Antony stated in a release.
CIBC’s Krista Friesen maintained her “underperformer” rating (similar to sell) and cut her target to $15 from $17, saying in a note that “2025 seems to be off to a challenging start,” citing a “soft demand outlook on top of possible tariffs clouds.”
The stock is up 2 per cent so far this year and down 29 per cent over the past 12 months.
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North American Construction Group Ltd. (NOA-T) shares closed down 5 per cent on Thursday after the company reported a drop in revenue and profit in its fourth quarter.
After markets closed on Wednesday, the company reported revenue of $305.6-million for its fourth quarter down from $328.3-million in the same period a year earlier.
Net income of $4.8-million or 19 cents per share was down from net income of $17.6-million or 58 cents a year earlier. The company said lower contributions from its Canadian heavy equipment segment weighed on results. Adjusted earnings of $1 per share were below expectations of $1.11 per share.
National Bank Financial analyst Maxim Sytchev said revenue was below consensus of $313-million and his firm’s estimate of $320-million.
“The beginning of the year has not been kind to cyclical small caps, including NOA,” he wrote in a March 20 note, adding the stock is down about 20 per cent year-to-date versus a 1-per-cent increase in the S&P/TSX Composite Index.
“With a still material re-rate opportunity ahead of us we continue to view the shares as very attractive at this level for risk-tolerant, value-minded investors,” he wrote, while reiterating his “outperform” rating but lowering his target price to $41 from $44.
The stock is down 24 per cent so far this year and down 23 per cent over the past 12 months.
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Neo Performance Materials Inc. (NEO-T) shares surged by as much as 27 per cent this week after the company reported higher fourth-quarter revenue and adjusted earnings that beat expectations.
Before markets opened on Tuesday, the industrial metals company reported fourth-quarter revenue of $134.9-million up from $128.7-million a year earlier. The expectation was for revenue of $103.1-million, according to S&P Capital IQ estimates.
Adjusted EBITDA of $20.7-million was up from $3.1-million a year earlier and well ahead of expectations of $11-million.
Its net loss was $12-million or 29 cents per share compared to $1.1-million or 3 cents a year ago.
The stock is up 19 per cent so far this year and has increased 58 per cent over the past 12 months.
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Cipher Pharmaceuticals Inc. (CPH-T) shares rose by more than 16 per cent this week after the company reported a big jump in both fourth-quarter revenue and adjusted EBITDA.
After markets closed on Tuesday, the company reported fourth-quarter revenue of US$11.8-million up 141 per cent from US$4.9-million a year earlier.
Adjusted EBITDA of US$5-million was up 73 per cent compared to US$2.9-million a year earlier.
Net income of $3.3-million or 13 cents US per share was down from US$7.7-million or 30 cents US a year earlier. The company said the drop was due largely to non-cash fair value adjustments to acquired inventory and costs related to its acquisition of Natroba last summer.
The stock is down 6 per cent so far this year and up 54 per cent over the past 12 months.
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Shares of Kits Eyecare Ltd. (KITS-T) rose by as much as 25 per cent this week after the company hiked its first-quarter guidance.
On Monday, the Vancouver-based company increased its adjusted EBITDA target range to 6 to 8 per cent, up from 4 to 6 per cent previously. The company said its forecasted revenue remains between $46-million to $48-million, representing a 32 to 38 per cent growth rate year-over-year.
The implied adjusted EBITDA for the first quarter of $3.3-million is 50 per cent above consensus of $2.2-million, Canaccord Genuity analyst Luke Hannan said in a March 17 note.
“Management called out strength in its glasses sales as being a key driver for the upward revision, with its offerings resonating with both new and existing customers,” wrote Mr. Hannan, who has a “buy” and $14.50 target on the stock.
“We also believe the improved margin performance stems from its move to a multitier pricing strategy for Kits-branded glasses as well as tailwinds from the ‘Buy Canadian’ trend we’ve seen emerge amongst our coverage universe.”
Ventum Capital Markets analyst Devin Schilling said in a March 17 note that the upward revision EBITDA guidance “signals continued operational excellence” an “further supports our optimistic outlook. He has a “buy” rating and $16 target price.
The stock is up 33 per cent so far this year and 70 per cent over the past 12 months.
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Information Services Corp. (ISC-T), a provider of registry and information management services for public data and records, reported higher sales for its fourth quarter.
After markets closed on Monday, the Regina-based company reported revenue of $62.2-million for the quarter ended Dec. 31, an increase of 8 per cent compared to the fourth quarter of 2023. The result was roughly in line with expectations of $62.6-million.
Net income was $5.3-million or 29 cents per share compared to $5.7-million or 32 cents a year earlier. Adjusted net income was $9.3-million or 50 cents per share compared to $9.8-million or 54 cents a year earlier. The expectation was below earnings of 55 cents per share.
The stock is down about 5 per cent so far this year and down 7 per cent over the past 12 months.
Upcoming small-cap earnings
March 24: East Side Games Group (EAGR-T)
March 26: Terago Inc. (TGO-T), Cematrix Corp. (CEMX-T)
March 27: Vitalhub Corp. (VHI-T), Bitfarms Ltd. (BITF-T),
March 28: Aimia Inc. (AIM-T), Galaxy Digital Holdings Ltd. (GLXY-T)
March 31: Pizza Pizza Royalty Corp. (PZA-T), Westport Fuel Systems Inc. (WPRT-T)
April 2: D2L Inc. (DTOL-T)
April 23: Cargojet Inc. (CJT-T)