A look at some small-cap stocks making news - or about to
Note: Small caps to watch is taking a holiday break and will return in the New Year.
Canada’s S&P/TSX Small Cap Index (TXTW-I) is up about 45 per cent over the past 52 weeks. It hit a record 1,206.84 on Dec. 12. The Russell 2000 in the U.S. is up about 7 per cent over the past 52 weeks. It hit a record of 2,595.98 on Dec. 12.
Small-cap summary
Transat A.T. Inc. (TRZ-T) shares fell in early Thursday trading after the company reported mixed results for its fourth quarter ended Oct. 31.
Before markets opened on Thursday, the company reported revenue of $771.6-million, down 2 per cent from $788.8-million last year. The result was ahead of expectations of $753.4-million, according to S&P Capital IQ estimates.
Adjusted EBITDA of $71.4-million was down from $128.4-million last year and below expectations of $96.5-million.
“This variation resulted from lower revenues, as well as from higher aircraft maintenance costs and salaries and employee benefits,” the company stated.
Its net loss of $12.5-million or 31 cents per share compared to net income of $41.2-million or $1.05 per share last year. Adjusted earnings came in at a loss of 42 cents versus a profit of 81 cents a year ago. The expectation was for a profit of 21 cents.
Related: Transat reports first annual profit since 2018
Transat agrees to Péladeau’s request for board vote
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NFI Group Inc. (NFI-T) shares rose in early Thursday trading after the company announced a new CEO. The shares also rose earlier in the week after the bus manufacturer announced a battery recall agreement.
After markets closed on Wednesday, the Winnipeg-based company said it appointed John Sapp as president and CEO, effective Jan. 1. He succeeds Paul Soubry, who will be retiring after 16 years with the company. Mr. Sapp’s last job was president of Eaton Corp.’s aerospace division since 2023 and was previously vice president and general manager of Collins Aerospace.
National Bank Financial analyst Cameron Doerksen said the leadership transition comes at a “potential inflection point” for the company.
“NFI has faced significant challenges in recent years (COVID downturn and related financial stress, major supply chain issues, and, most recently, a large bus recall), but 2026 may finally be a positive inflection year for the company,” he wrote in a Dec. 17 note. “At the end of Q3, NFI had a backlog of $13.2-billion that should support bus delivery growth through 2026 and beyond and although the company still faces some supply chain headwinds (notably, the seat supply issue that will linger into 2026), NFI is well positioned for growth under new leadership.”
He maintained his “outperform” (buy) and $18 price target on the stock.
Earlier this week, NFI announced a battery recall agreement with XALT Energy.
Before markets opened on Tuesday, Winnipeg-based NFI said the settlement includes “cash payments, the transfer of certain personnel and the contribution of relevant assets including battery cells, systems, equipment, and intellectual property.”
The settlement also fully resolves all disputes between NFI and XALT “with no admission of fault, wrongdoing, or liability by either party,” the company stated.
NFI announced in September the recall of about 700 buses due to an issue with the batteries and $229-million warranty provision in the third quarter. It said the settlement with the battery supplier will result in it recovering about 75-to-80 per cent of the provision.
“The settlement assists in offsetting costs associated with the recall, ensures a smooth transition for implementation of the remedy program, and provides increased visibility for NFI’s battery supply chain and ongoing support of batteries in service following XALT’s decision to wind down operations,” the company stated.
NFI said it will finalize the accounting treatment for the settlement and record the full transaction, including the final valuation of the battery cell inventory and the transferred assets, in its fourth-quarter financial results.
“In our view, the key component of the settlement is the upfront payment of $100-million in cash, which will more than fully fund the cash costs of the recall for NFI through 2026,” Mr. Doerksen wrote in a Dec. 16 note. “Our model had assumed that NFI would be on the hook for [about] 50 per cent of the costs of the recall, so we view the outcome and the certainty of the upfront cash as a positive outcome.”
He noted the battery supplier will also transfer IP and about $70-million worth of battery cells to NFI as part of the settlement.
“NFI will contract with another battery supplier to package the cells into a new battery pack, creating another battery supplier to diversify its supply chain,” the analyst wrote. “The positive cost impacts from the transferred cells will only begin to impact financials in 2028.”
Mr. Doerksen said the agreement “creates certainty around a near-term cash recovery related to the recall, fully funding the cash costs through 2026.”
While he said NFI still faces some supply chain issues related to a seat supply issue, “our longer-term positive view is unchanged.”
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Dye & Durham Ltd. (DND-T) has bought itself more time to file its delayed financial statements without triggering a debt default and started a process to sell the company.
The beleaguered Toronto legal software company had promised its overdue statements for its fiscal year ended June 30 and subsequent first quarter would be delivered sometime this week – but it also had until today under its senior credit agreement to file, or else it would have been in default, the Globe’s Sean Silcoff reports.
D&D said in a release late Wednesday that it had secured a two-month extension to the deadline in exchange for an unspecified consent fee and revealed it now expects the late statements to be filed next week. The company’s stock has been subject to a cease-trade order this week by the Ontario Securities Commission because of the tardy statements; it is expected to lift once the statements are filed.
The late statements will mean that investors will have less than 10 days to digest the financial state of the company before its Dec. 31 annual meeting. Shareholders are supposed to have at least 21 days under federal and Ontario business law, but D&D has asked the Ontario Superior Court for relief from the requirement.
The company also said its strategic committee had decided to start a sale process and will consider bids for both the entire company and its financial services division.
Read the Globe’s full story here
Related:
Another board overhaul caps off year of chaos for beleaguered Dye & Durham
Dye & Durham ex-CEO Matt Proud sues company two weeks after offering to buy it
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Talisker Resources Ltd. (TSK-T) shares fell in early Thursday trading after the company said it has temporarily reduced on-site staff at its Bralorne Gold Project in B.C. to essential workers only after severe rains caused extensive flooding and damage in the area.
“Flooding has caused significant landslides on Highway 40, the main access route to Bralorne, and has rendered alternative routes impassable,” the company stated in a release on Wednesday. The mine is located about 350 kilometres north of Vancouver.
In a follow-up release on Thursday morning, the company said officials will conduct a geotechnical stability evaluation today and will provide an expected timeline for partially or fully opening the road.
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Coveo Solutions Inc. (CVO-T) stock rose on Wednesday after the technology company announced a memorandum of understanding with the Government of Canada to “modernize government operations by exploring opportunities to deploy AI-powered experiences.”
The company said its partnership with the federal government “will help create high-quality, efficient and cost-effective services for Canadians, while building and ensuring Canada’s digital sovereignty.”
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Dream Industrial REIT (DIR-UN-T) shares rose on Wednesday after it and Dream Asset Management Corp. formed a $1.1-billion joint venture with the Canada Pension Plan Investment Board (CPPIB) to buy domestic industrial properties.
The partnership seeks to tap into pent-up demand for smaller facilities near big cities, according to the Globe’s James Bradshaw.
CPPIB will put up $1-billion of equity capital, with Dream Industrial adding $100-million, to buy “last mile” warehouses and distribution facilities located near major Canadian cities, which serve small businesses and consumers, playing a crucial role in e-commerce.
The joint venture is launching by acquiring 12 Canadian industrial properties for $805-million from Dream Industrial that cover a total of 3.6 million square feet of space in Ontario, Quebec and Alberta.
Read the full Globe story here
In a Dec. 17 note, Canaccord Genuity Corp. analyst Mark Rothschild said the transaction has “multiple positive implications, including growing management fees and NAV [net asset value] for Dream Unlimited, highlighting the discounted valuation at which Dream Industrial currently trades, and also validating the view that REITs in general are undervalued.”
He maintained his “buy” on Dream Industrial and increased his target price to $15 from $14.
He also maintained his “buy” on Dream Unlimited and target price of $38.
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Bird Construction Inc. (BDT-T) stock increased on Wednesday after the company announced the award of projects and agreements totaling approximately $1.2-billion.
In a release after markets closed on Tuesday, the company said the projects span major industrial capital investment projects and a series of significant new and renewed multi-year master service agreements with both new and existing clients.
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ATS Corp. (ATS-T) announced the appointment of Doug Wright as its new CEO, starting early in the New Year.
Before markets opened on Tuesday, the company said Mr. Wright most recently served as CEO of Indicor, an industrial solutions company. Ryan McLeod will continue to serve as interim CEO until Mr. Wright joins ATS and then will return to his position as chief financial officer, the company stated.
“We believe the appointment will provide investors with a sense of strategic and operational clarity following the departure of Andrew Hider [in August] and positions ATS constructively as it enters a new phase of growth anchored by its core defensive, highly-regulated life sciences, food & beverage and energy verticals,” National Bank analyst Maxim Sytchev wrote in a Dec. 16 note. He has an “outperform” (buy) and $57 target on the stock.
“We see Mr. Wright’s background as well-suited for ATS,” Stifel analyst Justin Keywood wrote in a Dec. 16 note.
Mr. Keywood, who has a “buy” and $52 target on the stock, also said the appointment should help to remove an overhang on the stock since July, “as automation peers continue to hit new highs.”
He also expects ATS to resume M&A “adding needed scale with operating leverage/margin expansion implications and improved valuation,” he wrote.
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Enghouse Systems Ltd. (ENGH-T) reported mixed results for its fourth quarter ended Oct. 31.
After markets closed on Monday, the company reported revenue of $124.5-million for the quarter versus $125.7-million in the fourth quarter last year. The result was below expectations of $125.4-million.
Net income was $21.1-million or 38 cents per share compared to $22.6-million or 41 cents per share last year. The result was ahead of expectations of 36 cents in the most recent quarter.
Adjusted EBITDA was $33.7-million, slightly ahead of expectations of $33.3-million and compared to $35.6-million a year ago.
“Enghouse continues to prioritize profitability and disciplined capital allocation amid ongoing organic growth challenges,” CIBC analyst Erin Kyle wrote in a Dec. 16 note.
“The enterprise business environment remains pressured by macroeconomic uncertainty, resulting in roughly flat [year over year] revenue, supported by acquisitions rather than internal growth.”
The analyst said they expect performance in 2026 “to look largely similar, and management reiterated its commitment to maintaining strong margins and generating cash flow rather than pursuing top-line expansion at the expense of profitability. With organic growth constrained, we expect acquisitions to be the focus in F2026 ... .”
The analyst maintained their “neutral” rating and increased their price target to $24 from $23 “after revising our model to better incorporate cost benefits from the restructuring.”
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Pollard Banknote Ltd. (PBL-T) announced a US$10-million contract with the Oklahoma Lottery.
Before markets opened on Tuesday, the Winnipeg-based lottery services provider said it’s the first partnership with the Oklahoma Lottery and “represents a major step towards enhancing player engagement.”
The contract began on Nov. 24 with an initial one-year term and six one-year renewal options.
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Quipt Home Medical Corp. (QIPT-T) shares rose this week after the U.S.-based home medical equipment provider announced an agreement to be taken private in a deal valued at about US$260-million.
The proposed acquisition, announced before markets opened on Monday, is an all-cash transaction for US$3.65 per share. The purchasers are affiliates of Kingswood Capital Management and Forager Capital Management.
Quipt said the purchase price represents a 162-per-cent premium to its unaffected stock price on May 19, the last full trading day before the public disclosure of Forager’s $3.10 per share proposal, and a 54-per-cent premium to Quipt’s 30-day volume-weighted average price as of Dec. 12.
“Forager had bid $3.10 per share earlier this year, but had been rebuffed by the company in its efforts to take the company private,” Canaccord Genuity analyst Richard Close said in a Dec. 16 note.
“In our opinion, the bid for Quipt is positive for shareholders given what appears to be [a] lack of positive near-term catalysts and multiple expansion for smaller cap healthcare names given policy and regulatory uncertainty.”
Added Mr. Close: “At this time, we would be surprised to see a higher offer materialize for Quipt given the initial offer by Forager to take the company private first came to light in May.”
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Organigram Global Inc. (OGI-T) reported higher revenue but a wider loss for its fourth quarter compared to the same period last year.
Before markets opened on Tuesday, the company reported net revenue of $80.1-million for the quarter ended Sept. 30, up from $44.7-million in the fourth quarter last year.
Adjusted EBITDA of $9.8-million was ahead of expectations of $7.3-million and compared to $5.9-million a year earlier. It said the increase year over year was “primarily attributable to higher net revenue, lower general and administrative expenses as a proportion of net revenue and the increase in adjusted gross margins.”
Its net loss of $38-million increased from a net loss of $5.4-million a year ago. It said the wider loss was primarily due to non-cash changes in the fair value of derivative liabilities, preferred shares and other financial assets.
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Canopy Growth Corp. (WEED-T) announced this week a deal to acquire Quebec-based MTL Cannabis Corp. (MTLC-CN) in a transaction valued at about $125-million.
Under the terms of the agreement, MTL shareholders will receive 0.32 of a common share of Canopy Growth and 14.4 cents in cash for each MTL share they hold.
Upcoming small-cap earnings:
Dec. 18: Reitmans (Canada) Ltd. (RET-X)
Jan. 15: Blackline Safety Corp. (BLN-T)