The difficulties small-cap investors must face before turning high-conviction stocks into outsized returns are academic and psychological, each of which can be overcome, supposing your tool box is appropriately outfitted.
This article is disseminated in partnership with small-cap stocks NU E Power and Specificity. It is intended to inform investors and should not be taken as a recommendation or financial advice.
On the academic side of things, the rational investor will know that small-caps’ promise of higher returns, at least in comparison to large-caps and their total market benchmarks, can only be reliably depended on if the underlying businesses offer some sense of a path to profitability. Whether revenue is only beginning to translate into adjusted EBITDA, or operating income is steadily transforming into net income, investors as a whole will gravitate towards these increasingly efficient businesses over time, kicking those doing little to increase the present value of their future cash flows to the curb.
On the psychological front, a knack for combing through income statements goes a long way towards preserving conviction when your chosen small-cap stocks tank for ostensibly exogenous reasons, such as interest rates or geopolitical tension, and don’t budge until months or years after, but on its own, an appetite for meticulousness isn’t enough to make you hold on, even when, rationally, you know you should.
What’s missing is a tolerance for pain, in the form of volatility or the paper loss of capital, that you must experience first before learning whether or not you’re fit to experience it again – without panic-selling your shares, that is – internalizing that sharp fluctuations are the price of admission to participate in the small-cap space.
Given these parametres, the best I can aspire to with my Weekly Market Movers is to profile companies that meet expectations on an academic front, leaving it up to you to weather the anxiety of owning their substantially depreciated stocks, knowing full well that the data suggests brighter days ahead. The following pair of small-cap stocks fits snugly within this conceptual lens.
NU E Power
Our first fallen stock, despite improving financials, is NU E Power, market capitalization C$21.77 million, a developer of institutional-grade energy assets combining renewables, gas, nuclear, battery storage and conventional grid access.
The company services demand from data center, industrial, utilities, as well as resource and infrastructure sectors, with projects representing more than 3.3. GW currently in development across Canada, Malaysia, Mongolia, Colombia and Nigeria.
Leveraging booming electricity consumption, which needs to more than double by 2050 to achieve net-zero emissions, leadership is focused on complementing utilities, not disrupting them, by strategically relieving congestion through low-cost energy storage that returns optionality to grid operators. Let’s briefly introduce the team:
- President and chief executive officer, Broderick Gunning, has built hybrid power and data centre projects around the world.
- Soheil Sharifi, head of corporate development, has led more than C$2.5 billion in transactions, including at a major IIROC dealer, with a focus on sustainability, mobility, clean technology and the energy transition.
- Frederick Stearman, chief technology officer, has founded numerous renewable power, AI data center and blockchain-based companies.
- John Newman, chief financial officer, brings decades of experience creating value for capital-intensive energy companies.
- NU E’s board of directors, for its part, is rich in mining, traditional energy and green energy experience.
NU E Power’s first asset monetization, under a letter of intent to sell its 503.5 MW Alberta solar & storage portfolio, is valued at a minimum of US$21.5 million, more than double the company’s current market capitalization, with the potential to earn hundreds of millions of dollars more, subject to development milestones.
With numerous projects in its pipeline and a recently closed C$1.7 million financing to build upon this initial win, NU E Power stock (CSE:NUE), down by more than 80 per cent since inception in 2025, appears to be offering an attractive entry point for investors willing to wait for leadership to put capital to work.
Gunning spoke with Stockhouse’s Ricki Lee about the Alberta sale and how it’s expected to fortify long-term growth and shareholder value. Watch the interview here.
Specificity Inc.
Our second small-cap stock tanking in the face of solid fundamentals is Specificity, market capitalization US$897,190, a Tampa-based digital marketing firm combining creative agency and technology expertise into a value-added twist on targeted advertising, one where audience members are identified through their unique device IDs, allowing for the delivery of ads on apps in use, as well as on associated devices, regardless of location.
Based on more than 5 billion data points for the purposes of demographic targeting, Specificity is delivering returns on investment for clients across the US, including a national garage door company, a chain pet supply store, a national spa franchise and one of the largest travel websites in Europe, proving out the cross-industry applicability of its differentiated technology.
This success is playing out on Specificity’s income statements, achieving positive operating cash flow in November 2025 ahead of expectations, followed by US$400,000 in annual run-rate revenue in December, well ahead of the US$260,000 collected in Q3 2025 – up by 21.7 per cent from Q2 – catalyzed by a 37.9 per cent drop in operating expenses to US$162,754, reflecting diligent cost management.
The company expects further growth into 2026 backed by a growing client pipeline, a track record of traffic increases up to 217 per cent, newly secured capital and a capable leadership team captained by incoming CEO, Robert Fedder, who has held executive roles at multinationals including Vodafone and KMPG, and advised global brands such as BMW and Bosch.
Fedder is supported by founder and outgoing CEO, Jason Wood, who has owned multiple successful sales and marketing businesses, plus an accomplished group of executives well-versed in building revenue by marrying brand and consumer needs.
Investors, broadly speaking, have shown anything but confidence in the quarters ahead, weighing Specificity stock (OTC:SPTY) down into a more than 90 per cent loss year-over-year, clearing the stage for steely contrarians to build positions amidst the doom and gloom and wait patiently for the market to come to its senses.
Outgoing CEO, Jason Wood, sat down with Ricki Lee to discuss the company’s improving cash flow. Watch the interview here.
Thanks for reading! I’ll see you next Monday for a new edition of Weekly Market Movers, where I delve into companies that sat down with Stockhouse for an interview over the past week. Here’s the previous article, in case you missed it.
Join the discussion: Find out what investors are saying about these small-cap stocks on the NU E Power Corp. and Specificity Inc. Bullboards and make sure to explore the rest of Stockhouse’s stock forums and message boards.
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