During times of economic uncertainty, including the present de-globalizing trend, active investors have an advantage over institutions when it comes to the best small-cap stocks to invest in.
When consumers and businesses are generally worried about the near future, they will tend to avoid higher risks in favor of more conservative strategies. In the case of consumers, this means more volatile assets like small-cap stocks will make way for the safety of cash and guaranteed investment certificates, leading to depressed share prices for astute investors to take advantage of.
While large institutions are well aware of these depressed small-cap prices, they cannot act on them because of their billions in assets under management, which would require the purchase of controlling interests in many of these tiny stocks to move the needle.
The logistical and regulatory headaches of managing public companies, compared to simply owning their stocks, is what allows individual investors to swoop in and pick these assets up for bargain prices on the road to long-term wealth creation.
With price-value dislocation trending higher because of the Russia-Ukraine War, lingering disruptions from COVID and ideological differences between global superpowers such as the United States and China, it’s more important than ever to keep an eye on prospective small-cap stocks to invest in.
With this thesis in mind, here are three companies with recent positive news flow and established momentum worth your full due diligence process:
Vertex Resource Group reports record Q2 results
Vertex Resource Group (TSXV:VTX) has been providing environmental services since the early 1960s. These encompass site selection, consultation and regulatory approval, as well as construction, operation, maintenance and environmental cleanup. Its customers are diversified across energy, mining, utilities, private development, public infrastructure, construction, telecommunications, forestry, agriculture and government.
Revenue for Q2 2023 represents the highest in company history at C$62.3 million, with free cash flow of C$8.2 million, up from C$7 million in Q2 2022.
According to management, the company is well positioned for earnings growth for the remainder of the year despite a C$1.5 million quarterly revenue hit because of Western Canadian wildfires. The view is supported by an increased backlog, the current trend towards less carbon-intensive energy sources, and improved service offerings from 2022 acquisitions.
CEO Terry Stephenson spoke with Coreena Robertson about the results.
The company’s stellar Q2 performance follows standout Q1 results marked by increased service demand, improved equipment utilization and accretive acquisitions.
Vertex Resource Group (TSXV:VTX) is down by 62.5 per cent since inception, making it a potential value stock given the environmental tailwinds it allows shareholders to invest in.
Gamelancer Media exceeds Q2 revenue forecast
Gamelancer Media (TSX:GMNG) is a digital-channel network and video production studio focused on creating viral videos. The company produces and distributes more than 100 videos daily across 66 channels that afford it an audience of more than 41 million Gen Z and Millennial followers and subscribers.
The company uses TV advertising economics to monetize TikTok and Instagram, as well as revenue-share with OTT platforms like Snapchat, to leverage its more than 2 billion monthly video views. This strategy has led to a growing marketing business catering to some of the largest brands in North America, the U.K. and Australia.
Q2 2023 financial results were highlighted by revenue growth of 171 per cent to C$1,420,830, up from C$523,865 in Q2 2022. Revenue increased by 263 per cent YoY compared to the six months ended June 30, 2022.
The company is confident in cost-cutting measures allowing it to become EBITDA positive by Q4 2023, during which time it plans to open its first office in New York City to better capitalize on the U.S. digital-media market.
CEO Jon Dwyer spoke with Coreena Robertson about the news.
The revenue growth follows the closing of a C$10 million private placement in June that enabled the company’s uplisting to the TSX and substantiated the unity of its shareholder base.
Gamelancer Media (TSX:GMNG) is down by 19.23 per cent since inception.
Silvercorp to acquire Orecorp
Our last prospective stock to invest in is Silvercorp (TSX:SVM), a Canadian mining company producing silver, gold, lead and zinc in China. It boasts a 17-year track record with a long history of profitability and ample growth potential through free cash flow, mergers and acquisitions, responsible and ESG mining practices and organic growth through drilling discoveries.
Management believes its acquisition of Orecrop – a Western Australia-based exploration company listed on the ASX – will increase profitability, afford it an extensive growth pipeline, and open it up to a high-potential mining operation in Tanzania where gold production is expected in the second half of 2025.
Lon Shaver, Silvercorp’s vice president, joined Coreena Robertson to shed light on the acquisition.
The news precedes Silvercorp’s impressive fiscal Q1 2024 results, including US$9.2 million in net income, all-in sustaining costs per ounce of silver, net of by-product credits, of US$9.46, and US$200.6 million in cash and cash equivalents and short-term investments. This quarterly performance continues the company’s consistent profitability through fiscal 2023.
As commodities enjoy renewed attention because of the energy transition, high government spending, persistent inflation and geopolitical tensions, Silvercorp’s established operations represent a key supply of precious and base metals in the global marketplace.
Silvercorp stock (TSX:SVM) is up by approximately 375 per cent since its 10-year low.
Join the discussion: Find out what everybody’s saying about these small-cap stocks on the Vertex Resource Group, Gamelancer Media and Silvercorp Metals Bullboards, as well as Stockhouse’s stock forums and message boards.
This is sponsored content issued on behalf of Vertex Resource Group, Gamelancer Media and Silvercorp Metals, please see full disclaimer here.
