5 Small-Cap Conviction Stocks to Buy Now

Royal Bank of Canada (TSX:RY)(NYSE:RY) put out its RBC Canadian Small-Cap Conviction List recently. These five are worth putting on your watch list.

| More on:

Royal Bank of Canada (TSX:RY)(NYSE:RY) put out its quarterly Small-Cap Conviction List, a group of 20 small-cap stocks it feels will outperform over the next 12 months.

Well, for one thing, they tend to be followed by fewer analysts, money managers, and retail investors, which means they tend to move higher when good news comes out. Of course, that is a double-edged sword with lousy news having the reverse effect, sending them lower.

That’s why it’s helpful to have a list like RBC’s to cut to the chase a little bit.

Since 2013, its list has delivered a total return of 125% — significantly higher than the 44% of the S&P/TSX Small-Cap Index Total Return and 58% total return for the TSX Composite Index.

Here are the five stocks I believe are the cream of the small-cap crop. Year to date through July 9, they’ve averaged a total return of 10.2%.

Over the next week, I’ll cover each of them in more detail.

Cargojet Inc. (TSX:CJT) not only made the bank’s small-cap conviction list, but the air cargo company also got on to RBC Dominion Securities’s “Imagine 2025” list, a group of 69 stock recommendations — one of only 12 Canadian companies — that will benefit from changing technology over the next seven years, leading to superior returns.   

Enercare Inc. (TSX:ECI) operates several businesses, but its largest — Home Services — provides water heater rentals to 1.1 million customers in Canada and the U.S. It has excellent recurring revenue from renters who shell out more than $24 a month to be able to have a hot shower.

Kinaxis Inc. (TSX:KXS) is an Ottawa-based company that provides logistics and supply-chain software via monthly subscription over the cloud to large and mid-sized companies in need of its industry-leading software. It’s a comer.

Tricon Capital Group Inc. (TSX:TCN) is a real estate investment manager based in Toronto that invests in commercial and residential real estate, including the burgeoning single-family residential rental market in the U.S. It invests alongside its asset management clients, so it’s got real skin in the game. It’s one of my favourite TSX stocks; I could go on forever about its business.

Great Canadian Gaming Corp. (TSX:GC) was a good stock to own entering 2017. After the 18 months it’s had since then, it’s fair to say it’s now a great company with major GTA casino projects to keep it busy for years to come. One of two exciting Canadian gambling stocks, investors have a real opportunity for gains over the next three to five years.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Will Ashworth has no position in any stocks mentioned. Kinaxis and Tricon are recommendations of Stock Advisor Canada.

More on Investing

A worker gives a business presentation.
Dividend Stocks

TSX Communications in April 2024: The Best Stocks to Buy Right Now

Here are two of the best TSX communication stocks you can buy in April 2024 and hold for years to…

Read more »

Man holding magnifying glass over a document
Tech Stocks

Watching This 1 Key Metric Could Help You Beat the Stock Market

One key metric that Buffett looks at is the return on equity. Here's why you should watch it.

Read more »

Man considering whether to sell or buy
Dividend Stocks

Royal Bank of Canada Stock: Buy, Sell, or Hold?

Royal Bank of Canada (TSX:RY) has a high dividend yield. Should you buy it?

Read more »

oil tank at night
Energy Stocks

Is Suncor a Buy, Sell, or Hold?

Suncor Energy stock is off to a strong start in 2024. Is the TSX energy stock a good buy right…

Read more »

Daffodils in bloom
Tech Stocks

2 Best “Magnificent Seven” Stocks to Buy in April

Two surging mega-cap tech stocks are the best buys among the “Magnificent Seven” this April.

Read more »

A golden egg in a nest
Stocks for Beginners

Got $5,000? 5 Stocks to Buy for Lasting Wealth

Got $5,000 to build a long-term compounding stock portfolio? Here are five top Canadian stocks to building lasting lifetime wealth.

Read more »

Businessman looking at a red arrow crashing through the floor
Dividend Stocks

BCE’s Stock Price Has Fallen to its 10-Year Low of $44: How Low Can it Go?

BCE stock price has dipped 39% in two years and shows no signs of growth in the next few months.…

Read more »

Dollar symbol and Canadian flag on keyboard
Dividend Stocks

Invest $10,000 in This Dividend Stock for $3,974.80 in Passive Income

This dividend stock gives you far more passive income than just from dividends alone, so consider it if you want…

Read more »