Good news or bad news tends to have a bigger impact on smaller stocks than do larger companies.
Right now, mid-cap Spin Master (TSX: TOY) and small-cap Savaria (TSX: SIS) both offer good value. Both companies can deliver incredible price appreciation for the portfolio of today’s buyers.
Spin Master
Spin Master is the best toy company you can buy. It’s faring much better than its larger peers like Mattel. Spin Master is more than a toy company. It’s innovative, creates evergreen global entertainment properties and it’s on top of the changes in children’s behaviours, making strategic acquisitions to complement its offerings.
Spin Master stock has been shaved off 8% in the last week. However, it’s known to experience large movements.
Cautious investors can wait for the stock to settle before buying. However, at below $35 per share at writing, the growth stock trades at a very reasonable forward price-to-earnings ratio of about 17.1.
The upcoming Christmas shopping season could bring a resurgence in the stock. It just launched a new interactive toy, Owleez, at the end of September. Owleez and five other Spin Master toys are on Walmart‘s Top Rated by Kids List.
Analysts have an average 12-month price target, which represents about 36% near-term upside potential!
Savaria
Savaria stock has recovered more than 20% from its August lows, delivering annualized total returns of more than 31% in the past five years.
The growth company has been riding on the mega-trend of a growing aging population. Year to date, Savaria increased revenue by 50% to $181 million over the same period last year.
Specifically, Savaria designs, develops, and manufactures a wide range of products to help people gain personal mobility, including stair lifts, wheelchair lifts, ceiling lifts, residential and commercial elevators, and the conversion and adaptation of vehicles.
It’s a global leader in the accessibility industry and operates in three segments: accessibility (70% of year-to-date revenue), patient handling (23%), and adapted vehicles (6%).
Savaria has manufacturing operations in Canada and China and distributes products to the United States, Australia, South America, and Europe.
Analysts have an average 12-month price target, which represents almost 25% near-term upside potential. In addition to being a growth stock, Savaria also pays a yield of 3.45%.
It just increased its monthly dividend by 9.4% in September and has more than doubled its dividend in three years.
That said, investors shouldn’t fully trust the dividend because the company tends to cut it when needed. Since 2004, Savaria has cut its dividend six times, but today the dividend is 15 times what it was at that time.
Stay hungry. Stay Foolish.
