While you don’t have to invest in small-cap stocks with profitable businesses, supposing their products and services are impressive enough to warrant the risk, the pool of prospects is by no means limited to speculations.
A simple screen delineated by market capitalization and positive net income will reveal a multitude of companies backed by profitable operations, telling compelling stories about why their stock prices do or do not correspond to the quality of their income statements.
In this Friday’s edition of Weekly Market Movers, I’ll sketch out cases for two such companies, each of which joined Stockhouse for an interview over the past week.
Nextleaf Solutions
Our first profitable small cap stock pick is Nextleaf Solutions, market capitalization C$9.76 million, a life science company and licensed cannabis processor offering a portfolio of consumer brands, cannabis derivative products and high-potency bulk ingredients across Canada’s medical and recreational markets. The company’s Glacial Gold brand is a national leader across multiple categories, including cannabis softgels, vapes and oils.
Nextleaf’s trajectory over the past five years is encouraging, including over 18 times revenue growth from C$0.69 million in 2020 to C$12.48 million in 2024, while showing clear progress in terms of diminishing net losses, as highlighted by:
- Closing out fiscal 2023 at a net profit of C$0.22 million.
- Posting a net profit of C$0.53 million in Q1 2025.
Based on this positive trend, a reasonable investor would be surprised that Nextleaf stock (CSE:OILS) has fallen by over 70 per cent since 2020 and would consider a re-rating very much in play, contingent on management continuing to grow market share with respect for the bottom line.
Emma Andrews, Nextleaf Solutions’ chief executive officer (CEO), sat down with Stockhouse’s Lyndsay Malchuk to discuss the cannabis company’s Q1 fiscal 2025 results. Watch the interview here.
AKITA Drilling
Our second profitable small-cap stock well worth highlighting this week is AKITA Drilling, market capitalization C$63.77 million, an intermediate North American land drilling contractor with 36 high-spec rigs operating in major Canadian and United States resource basins.
AKITA grew revenue from C$119.66 million in 2020 to C$191.3 million in 2024, lifting the company out of unprofitability into positive net income for three years running, while consistently paying down debt.
Investors have embraced management’s ability to monetize rigs and keep utilization rates high, pushing AKITA Drilling stock (TSX:AKT.A) up by over 107 per cent since 2020, with service demand trending towards continued strength thus far in 2025.
Colin Dease, AKITA’s CEO, and Darcy Reynolds, chief financial officer, joined Lyndsay Malchuk to contextualize the company’s 2024 results. Watch the interview here.
Join the discussion: Find out what everybody’s saying about these profitable small-cap stocks on the Nextleaf Solutions Ltd. and AKITA Drilling Ltd. Bullboards and check out Stockhouse’s stock forums and message boards.
This is sponsored content issued on behalf of Nextleaf Solutions Ltd. and AKITA Drilling Ltd., please see full disclaimer here.
(Top image: Adobe Stock)