While the stock market is efficient over the long term, accurately matching share price with intrinsic business value, it is an academic pipe dream to suppose this is the case over the short term.
Whether it’s the macroeconomic worry of the day, a secular industry trend, or investors’ exaggerated reaction to company news, stocks can dive well below or miles beyond fair value, allowing investors to get in at cheap prices or short in the hopes of a precipitous fall.
Here are three unloved microcap stocks where we see market misperception based on recent performance:
Decibel Cannabis
Decibel, market cap C$24.54 million, is the cannabis company behind the Qwest, Vox and General Admission brands.
The company grew revenue by more than 18.5 times from C$6.24 million in 2019 to C$115.96 million in 2023, plus a healthy C$20.95 million in Q1 2024, and has backed up this growth by significantly reducing net losses over the past five years. Results over the past three years and five quarters suggest the company is on the verge of consistent profitability.
Decibel’s encouraging trajectory – despite rampant overproduction and low margins across the Canadian cannabis industry – has been met with a 57 per cent drop in stock price year-over-year and an 88 per cent drop since 2019, making an investment today an incredibly prospective one. Here are three catalysts:
- A Canada-wide presence and ongoing international expansion into Australia and the United Kingdom.
- The relaunch of its popular Qwest brand.
- Right-sizing initiatives expected to save C$2 million per year.
Benjamin Sze, Decibel Cannabis’ chief executive officer, spoke with Stockhouse’s Lyndsay Malchuk about the company’s plans for the near future. Watch the interview here.
Decibel Cannabis (TSXV:DB) last traded at C$0.06 per share.
Golden Sky Minerals
Golden Sky Minerals, market cap C$3.05 million, is a junior mining stock developing a portfolio of high-potential properties in British Columbia and the Yukon to the mineral resource stage. These are highlighted by:
- The 50,800-hectare Rayfield property in the Quesnel Trough, which is host to some of British Columbia’s most prolific copper- and gold-producing mines. The property features multiples zones with multi-kilometre stretches of high-grade copper-gold mineralization.
- The 7,300-hectare Hotspot property in the Yukon, whose three gold zones hold the potential for significant mineralized systems, and are only 25 km southeast of the Tanacross copper-molybdenum-gold porphyry deposit (360,000 ounces of gold).
- The 15,000-hectare Lucky Strike property in the Yukon’s White Gold District (over 6 million ounces of gold discovered since 2007), where five gold zones extend for more than 10 km with rock grab samples as high as 41.7 grams per ton of gold.
With geophysical targets identified at Rayfield, demonstrated prospectivity at its other properties, and more than C$1 million in the bank with no debt as of Q1 2024, Golden Sky Minerals is positioned to delineate mineralized zones and give the market something to get excited about.
The market vehemently disagrees, prematurely, in our opinion, having tanked the stock by more than 90 per cent since 2019.
John Newell, Golden Sky Minerals’ president and chief executive officer, spoke with Lyndsay Malchuk about the new targets and recent extension of the Rayfield property. Watch the interview here.
Golden Sky Minerals (TSXV:AUEN) last traded at C$0.15 per share.
Nextech3D.ai
Our last unloved microcap stock is Nextech3D.ai, market cap C$18.09 million, an augmented reality (AR) and artificial intelligence (AI) technology company crafting 3D experiences at scale for manufacturers and e-commerce. It has delivered 100,000 3D models and millions of AR experiences to hundreds of global customers since inception, enhancing user experience and return on investment, and counts Amazon as a major customer for its high-quality 3D photorealistic models. The mega-cap stock recently recognized Nextech as a Certified 3D Model External Content Provider.
Sitting at inflection points in four multi-billion-dollar markets (slide 6), including AI, 3D imaging, AR and machine learning, Nextech believes its competitively advantaged offerings (slide 7) are growing into leadership positions.
This growth isn’t happening in a linear fashion, as the company’s volatile revenue over the past four years demonstrates, but its diversified clientele and robust deal pipeline at the cutting edge of technology make it an attractive option on the future of how people interact and do business.
Evan Gappelberg, Nextech3D.ai’s chief executive officer, spoke with Stockhouse’s Coreena Robertson about the company’s new Amazon certification. Watch the interview here.
Nextech3D.ai (CSE:NTAR) is down by 46 per cent since inception in 2018, last trading at C$0.14 per share, setting investors up to ride projected growth to more than 250,000 3D models created by 2025.
Join the discussion: Find out what everybody’s saying about these unloved microcap stocks on the Decibel Cannabis Company Inc., Golden Sky Minerals Corp. and Nextech3D.ai Bullboards, and check out Stockhouse’s stock forums and message boards.
This is sponsored content issued on behalf of Decibel Cannabis Company Inc., Golden Sky Minerals Corp. and Nextech3D.ai, please see full disclaimer here.
(Top photo, generated by AI: Adobe Stock)
