Canada’s Top Growth Stocks Under $5

Investing in small caps have that have a proven history can yield outsized returns.

| More on:
edit Colleagues chat over ketchup chips

Image credit: Photo by CIRA/.CA.

There is a certain level of attraction about stocks with a low share price. At the heart of this attraction is the fact you can buy more shares in a company. 

For example, if you had $1,000 today, you could only buy one share of Shopify (TSX:SHOP)(NYSE:SHOP) which has been one of Canada’s hottest stocks over the past few years. Conversely, you could buy 200 shares of a company trading at $5.00 at writing. 

Although a company’s share price has no bearing on performance, getting in early on high-growth stocks has the potential to yield outsized returns. With that in mind, here are two growth stocks that have made big moves and are projected to maintain strong forward momentum.   

Hamilton Thorne

This little-known health care company is one of the fastest growing in the industry. The company develops, manufactures and markets laboratory equipment consumables, software and services to the Assisted Reproductive Technologie (ART) field — a $17.5 billion dollar market.

Hamilton Thorne (TSXV:HTL) has a global footprint and has grown revenues at an impressive clip. Over the past five years, it has posted an impressive 31% compound annual growth rate (CAGR). Perhaps more impressively, it has grown EBITDA at a CAGR of 71% over the same period. 

The industry is highly fragmented, with approximately 160 players in the ART laboratory supplier market. As a top 10 company, Hamilton Thorne is becoming a leading consolidator with five accretive acquisitions over the past five years. 

Looking forward, the company is expected to grow earnings at a 50% annual rate and all five analysts rate the company a buy. They have an average one-year price target of $1.54, which implies 31% upside from today’s price of $1.18 per share. Even the lowest price on the street ($1.40) points to double-digit gains (19%). 

WELL Health Technologies

One of the top TSX Venture companies in 2018 and 2019, WELL Health Technologies (TSX:WELL) recently graduated to the TSX Index. WELL is a leading electronic medical records company that also owns and operates a series of medical clinics. 

Over the past year, the company has been a leading industry consolidator, and as a result has become the third largest EMR provider in Canada and the largest OSCAR service provider in the country. 

The company’s performance has been nothing short of staggering. Over the past three years it has doubled a number of times, returning a total of 1,100% over this period. Given that the company is growing revenue at a triple-digit pace, another double in 2020 is not out of the question. 

Analysts have a one-year price target of $2.19 per share, which implies 17% upside from today’s price. Keep in mind, however, that this doesn’t take any future acquisitions into account. Over the past few months, the company has been aggressive in the M&A space closing on four deals since September. 

Foolish takeaway

It is not recommended that investors chase stocks with a low share cost. However, there are always exceptions that can yield outsized returns. 

Hamilton Thorne and WELL Health Technologies are two such examples. They operate in industries that provides them considerable organic growth opportunities. Similarly, as leading consolidators they are both emerging as industry leaders within their own niches. 

Although both have run up in a big way, there is still plenty of upside left in both of these little-known, high-quality companies.

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 mlitalien owns shares of Shopify and Hamilton Thorne Ltd. Tom Gardner owns shares of Shopify. The Motley Fool owns shares of and recommends HAMILTON THORNE LTD, Shopify, and Shopify.

More on Investing

Target. Stand out from the crowd
Investing

2 Canadian Stocks I’m Buying Lots of This Year

I’m looking to snatch up exciting Canadian stocks like VieMed Healthcare Inc. (TSX:VMD) throughout 2023.

Read more »

grow money, wealth build
Dividend Stocks

Got $3,000? 3 TSX Growth Stocks to Buy in January 2023

Top TSX growth stocks that look appealing for 2023.

Read more »

woman data analyze
Dividend Stocks

Need Passive Income? Turn $15,000 Into $851 Annually

This passive-income stock is already climbing higher, up 16% in the last three months! Yet it's still valuable, so you…

Read more »

Senior Man Sitting On Sofa At Home With Pet Labrador Dog
Dividend Stocks

Retirees: 3 Reliable Canadian Dividend Stocks to Buy Now for Passive Income

Top TSX dividend stocks now appear oversold.

Read more »

A red umbrella stands higher than a crowd of black umbrellas.
Investing

2 TSX Stocks Safer for Investing in a Recession

These consumer companies will likely beat the broader market averages amid a recession. These stocks offer stability, income, and consistent…

Read more »

Dividend Stocks

For $100 in Passive Income Each Month, Buy 1,500 Shares of This REIT

REITs such as Northwest Healthcare can enable investors create a passive-income stream as well as benefit from capital gains.

Read more »

A colourful firework display
Dividend Stocks

2 Canadian Growth Stocks (With Dividends) to Start 2023 With a Bang

Here are two of the best dividend-paying Canadian growth stocks you can invest in at the start of 2023 and…

Read more »

sale discount best price
Dividend Stocks

4 Insanely Cheap Canadian Stocks to Buy for Passive Income

The recent bear market has created some incredible bargains, especially for those looking for passive income. Here are four cheap…

Read more »