While the Canadian stock market, like any other, efficiently reflects intrinsic value in share prices over the long term, it often gets it wrong in the short term, predominantly with undercovered small-cap stocks, underpricing assets too early in their development for most investors to buy into despite the exponential nature of their potential.
Today’s Weekly Market Movers covers three attractive names to put this contrarian investment thesis in play, each of them marked by assets and operations that seem destined for far more than their stock prices suggest, granting investors strong long-term chances at realizing considerable upside.
Theralase Technologies
Theralase Technologies, market capitalization C$45.47 million, is a clinical-stage pharmaceutical company researching and developing light, radiation, sound and/or drug-activated small-molecule compounds, their associated drug formulations and the light systems that activate them, with the goal of destroying strategic cancers, bacteria and viruses.
The company has spent the past few years flooding the market with pre-clinical and early-stage evidence supporting its lead drug candidate’s ability to improve patient outcomes in the areas of bladder cancer, herpes, immunotherapy, chemotherapy, lung cancer, as well as other viruses including Zika, coronavirus and H1N1, opening it up to address hundreds of billions of dollars in market demand.
Despite this massive long-term growth runway, Theralase stock (TSXV:TLT) has given back 11.36 per cent since 2019, last trading at C$0.20 per share, positioning readers to zig to the market’s zag as the company’s founder-led management team steeped in medical research experience navigates its way though the clinical trials process.
Roger DuMoulin-White, Theralase’s president and chief executive officer, spoke with Stockhouse’s Lyndsay Malchuk earlier this week about the company’s phase-II registration study for Bacillus Calmette-Guérin-unresponsive non-muscle invasive bladder cancer. Watch the interview here.
Eastern Platinum
Our second contrarian and Canadian-listed small-cap stock is Eastern Platinum, market capitalization C$40.47 million, which directly and indirectly owns a number of platinum group metals (PGM) and chrome properties in South Africa’s Bushveld Complex, the host to about 80 per cent of the world’s PGM-bearing ore. As a whole, the company’s portfolio represents billions of dollars worth of resources in the ground.
Eastern Platinum is in the midst of a transformation that will see it derive about 65 per cent of its revenue from PGM by 2026, up from less than 10 per cent currently, with eyes on leveraging strong long-term demand in the more than US$30 billion global PGM market.
With underground mining ramping up at Eastern Platinum’s flagship Crocodile River mine, revenue is likely to increase over the near term, affording a management team of mining lifers greater market share with which to continue proving its ability to operate in the interest of shareholders.
The company has been net income positive since Q2 2023, excepting a US$920,000 loss in Q1 2024 reflecting investments to restart underground mining at Crocodile River and kickstart its plan to become a PGM-centric operation.
Despite the tailwinds and recent profitability substantiating its long-term plan, Eastern Platinum stock (TSX:ELR) is up by only 5.26 per cent since 2019, last trading at C$0.20 per share.
Wanjin Yang, Eastern Platinum’s CEO, spoke with Stockhouse’s Coreena Robertson about the company’s Q2 2024 results. Watch the interview here.
American Potash
Our final contrarian pick in the universe of Canadian small-cap stocks is American Potash, market capitalization C$11.13 million, and its flagship 35,000-acre Green River potash and lithium project in Utah, which is host to an exploration target estimated to house 600 million to 1 billion tons of sylvinite grading between 19-29 per cent potassium chloride, placing it among the largest potential potash sources in the United States. The target, backed up by an NI 43-101 technical report, is within the same stratigraphic horizon as the nearby Moab potash mine operated by Intrepid Potash (NYSE:IPI), the largest potash company in the United States.
Green River is also highly prospective for lithium thanks to residing next to Anson Resources‘ resource of 1.5 million tons of lithium carbonate equivalent (LCE) and additional exploration target between 2-2.6 million tons of LCE.
Sitting on a potentially company-making asset, American Potash has not rested on its laurels, recently securing plan of operations approval to validate Green River’s large-scale lithium and potash target and set course for an initial resource estimate.
As demand for potash grows steadily in North America (slide 27), as it has for decades, and the global lithium supply swells by 40x by 2040 (slide 19), American Potash is in a prime position to leverage these tailwinds through exploration results over the short-term and through economic feasibility studies over the coming years.
Bolstered by a recently completed C$1 million private placement, investors in American Potash (CSE:KCL) may finally benefit from the positive news flow the market needs to break the stock out of its under C$0.15 range since 2019.
Simon Clarke, American Potash’s president and CEO, spoke with Lyndsay Malchuk about the company’s drilling and prospecting approvals at the Green River potash and lithium project. Watch the interview here.
Join the discussion: Find out what everybody’s saying about these Canadian-listed small-cap stocks on the Theralase Technologies Inc., Eastern Platinum Ltd. and American Potash Corp. Bullboards and check out Stockhouse’s stock forums and message boards.
This is sponsored content issued on behalf of Theralase Technologies Inc., Eastern Platinum Ltd. and American Potash Corp., please see full disclaimer here.
(Top image: Adobe Stock)