Despite the fervor fueling the growth of artificial intelligence (AI), whose uncharted efficiencies promise to unlock value across industries, the best way for Canadian investors to maximize returns remains tried and true; namely, allocating into small-cap stocks with profitable operations positioned to outlast the hype and deliver long-term growth.
How I picked the top 5 Canadian small-cap AI stocks
I searched the Canadian investment universe for profitable long-term growth using Investing.com’s screener, set as follows:
- Market capitalization set to small cap between C$400 million to C$2 billion.
- Price-to-earnings ratio set to profitable, or greater than zero.
After that, I combed through the list of 138 entries for stocks with direct exposure to AI, compiling the top five based on how long they’ve gone without ending a fiscal year with a net loss. Here’s what I found:
- Enghouse Systems, market capitalization (cap) C$1.53 billion, profitable for more than 10 years.
- Evertz Technologies, market cap C$962.88 million, profitable for more than 10 years.
- Computer Modelling Group, market cap C$872.42 million, profitable for more than 10 years.
- Tecsys, market cap C$658.28 million, profitable for the past five years.
- Calian Group, market cap C$575.37 million, profitable for more than 20 years.
The top 5 Canadian small-cap AI stocks
Enghouse Systems
Our first stock is Enghouse Systems, a provider of mission-critical business software solutions for contact centers, video communications, virtual healthcare, education, telecommunications, networks, IPTV, public safety and transit.
The company’s AI offering includes contact centre data analysis, spanning voice, email, SMS, social media and webchat, designed to home in on customer needs.
Thanks to a disciplined growth strategy focused on acquisitions, Enghouse managed to growt net income from C$24.3 million in 2013 to C$81.33 million in 2024.
Enghouse Systems stock (TSX:ENGH) last traded at C$27.68. Shares are down by 45.37 per cent since 2020.
Evertz Technologies
Next up, we have Evertz Technologies, a designer, manufacturer and marketer of video and audio infrastructure solutions for the TV, telecommunications and new-media industries. The company does most of its business with content creators, broadcasters, specialty channels and television service providers, helping them generate additional revenue and reduce costs through more efficient content distribution, monitoring and management.
Evertz’s big data analytics solution uses machine-learning algorithms to help media organizations collect, search, monitor and interpret data from any device to enhance decision-making and support growth initiatives.
Management has kept the company on the path of shareholder value, averaging annual net income in excess of C$60 million going back over a decade, as recently highlighted in fiscal 2024.
Evertz Technologies stock (TSX:ET) last traded at C$12.76. Shares have given back 29.03 per cent since 2020.
Computer Modelling Group
Occupying the middle of the ranking, Computer Modelling Group is a software and consulting company solving complex subsurface and surface challenges for the new energy industry from offices in Calgary, Houston, Oxford, Dubai, Bogota, Rio de Janeiro, Bengaluru, Kuala Lumpur, Oslo, Stavanger and Kaiserslautern.
CMG’s technology suite deploys AI to help explorers optimize the location and drilling of new wells with proven results.
The company has built an enviable client base since going public in 1997, including 100 per cent of super major oil companies, 90 per cent of the top 10 national oil companies and 75 per cent of the world’s top 25 largest oil companies, which has allowed it to average over C$20 million in annual net income for over a decade.
Computer Modelling Group stock (TSX:CMG) last traded at C$10.63. Shares are up by 29.63 per cent since 2020.
Tecsys
Our penultimate pick for top small-cap AI stock is Tecsys, a provider of advanced supply chain solutions to clients all over the world. Its expertise is centred on cloud solutions for enterprise resource planning covering warehouses, services, distribution and transportation.
The company’s Innovation Lab, debuted in 2023, evaluates the latest in AI, machine learning and generative AI to solve for inefficiencies and improve decision making in the supply chain industry.
Tecsys is also deriving revenue from AI, as recently highlighted by a collaboration with Werner Electric to build an automated sorting system for its inventory.
Management’s focus on top-tier customers (slide 9) and high-margin software-as-a-service growth (slide 8) has led to significant revenue growth from C$104.86 million in 2020 to C$171.24 million in 2024 while averaging over C$3.5 million in annual net income.
Tecsys stock (TSX:TCS) last traded at C$44.66. Shares have added 107.14 per cent since 2020.
Calian Group
Last in our list of top small-cap AI stocks is Calian Group, a global products and services company active in manufacturing, defense, healthcare delivery, communications, satellites, virtual reality training and cybersecurity.
The over 40-year-old company’s vast AI portfolio includes MaestroEDE, an exercise management tool to develop military training scenarios, its Healthcare Data and AI Readiness Assessment tool to expedite data-driven patient care, as well as its AI-enabled virtual and augmented reality learning platform.
Calian’s operations are an anomaly, especially in the nascent AI space, having been profitable for over 20 years, including an average of over C$10 million in annual net income from fiscal 2020 to fiscal 2024 while growing revenue from C$432.32 million to C$746.61 million, respectively.
Calian Group stock (TSX:CGY) last traded at C$48.84. Shares have added 26.53 per cent since 2020.
With five small-cap AI stocks on your due diligence list, you’re ahead of the herd when it comes to harvesting value from this burgeoning market. But if you’re eager for more names to consider, make sure to check out:
- The top 10 artificial intelligence stocks under $10.
- 10 best-performing AI stocks for Canadian investors.
- Canadian artificial intelligence ETFs.
- The top 10 artificial intelligence penny stocks.
- AI companies to invest in.
Join the discussion: Find out what everybody’s saying about these top Canadian small-cap AI stocks on the Enghouse Systems Ltd., Evertz Technologies Ltd., Computer Modelling Group Ltd., Tecsys Inc. and Calian Group Ltd. Bullboards and check out Stockhouse’s stock forums and message boards.
Data as of January 3, 2025.
The material provided in this article is for information only and should not be treated as investment advice. For full disclaimer information, please click here.
(Top image, generated by AI: Adobe Stock)
