MENU

3 Top Small-Cap Stocks to Buy in December

The S&P/TSX Composite Index finally bounced back and climbed 218 points on November 21. This occurred the same day the ruling federal Liberals announced a small tax-break package for businesses to stem the tide of investment flight after the U.S. Tax Cuts and Jobs Act in December 2017. The package is not comparable to the nearly 15% cut in corporate taxes delivered by the Trump administration, but it should still provide a boost to investment in the near term.

Today, we are going to look at three small-cap stocks that are worthwhile targets in December. Investors should be on the hunt for discounts after a rocky October and November. Let’s dive in.

Stelco Holdings (TSX:STLC)

Stelco is a Hamilton-based steel producer. Shares had dropped 14% over a three-month span as of close on November 21. The company posted its third-quarter results on November 13.

Stelco reported revenue of $619 million, which was up 84% from Q3 2017. Adjusted EBITDA has climbed to $399 million in the first nine months of 2018, which represents an increase of 171% from the year-to-date period in 2017. Steel shipping volumes climbed 43% year over year to 586,000 net tonnes. The board of directors announced a quarterly dividend of $0.10 per share, representing a modest 1.4% yield.

The fate of the United States-Mexico-Canada Agreement is uncertain, as Mexico and Canada continue to lobby for steel tariffs to be scuttled. The deal is expected to be ratified on November 30, making the development something to monitor for those interested in dipping into Stelco stock.

Andrew Peller (TSX:ADW.A)

Andrew Peller is an Ontario-based wine producer. Shares had dropped 20.3% over a three-month span as of close on November 21. The company released its fiscal 2019 second-quarter results on November 7.

Sales rose 12.5% year over year in the second quarter with 10.2% growth in the first six months of fiscal 2019. Adjusted EBITDA has climbed 15.4% in the first six months of the fiscal year, while adjusted net earnings have increased to $20.1 million over $17.8 million in the first six months of fiscal 2018. Back in June, I’d recommended investors consider adding Andrew Peller due to its strong financials and the impressive trajectory of the wine market in Canada and worldwide.

Andrew Peller dipped into oversold territory according to its RSI last week, but the stock is still priced at an attractive $13.94 as of close on November 21. It also offers a modest quarterly dividend of $0.0513 per share.

Badger Daylighting (TSX:BAD)

Badger Daylighting is a Calgary-based company that provides non-destructive hydrovac excavation services. Shares had climbed 15% month over month as of close on November 21. Badger released its third-quarter results on November 12.

The company posted adjusted EBITDA of $50.9 million, or $1.37 per share, which was a 31% increase from Q3 2017. Revenue climbed 20% year over year to $168.7 million. The company provided an updated outlook that sees 2018 in line with original projections, it also expects adjusted EBITDA in the range of $170 million and $190 million for 2019.

Badger last paid a monthly dividend of $0.045 per share, representing a modest 1.6% yield.

Motley Fool Canada Announces a FREE Gift for Investors

The financial world is buzzing as Iain Butler and his team of market-beating analysts in Stock Advisor Canada pick their favorite stocks for 2019 and beyond.

As a special gift for investors, they’ve decided to give away one of their top TSX stock picks of 2019 for FREE.

Click here to claim your free TSX stock pick for 2019

Fool contributor Ambrose O'Callaghan has no position in any of the stocks mentioned. Badger Daylighting is a recommendation of Stock Advisor Canada.

I consent to receiving information from The Motley Fool via email, direct mail, and occasional special offer phone calls. I understand I can unsubscribe from these updates at any time. Please read the Privacy Statement and Terms of Service for more information.