Here Are My Top Small-Cap Stocks to Buy This Summer

TSX investors should pursue small-cap stocks like Park Lawn Corporation (TSX:PLC) that have the potential for good long-term growth.

| More on:
Couple relaxing on a beach in front of a sunset

Image source: Getty Images.

A small-cap stock is generally a company with a market capitalization between $300 million and $2 billion. Today, I want to look at my favourite small-cap stocks on the TSX to target before the start of the summer. Let’s dive in.

One small-cap stock in healthcare that has soared this spring

In late March, I’d discussed why VieMed Healthcare (TSX:VMD) was the perfect stock for investors to snag in the midst of the COVID-19 pandemic. VieMed provides in-home durable medical equipment and healthcare solutions. It has made waves as a supplier of ventilators. This small-cap stock has surged since March.

Shares of VieMed have climbed 131% over the past three months as of close on June 8. It was one of the few companies to raise its guidance in April ahead of its earnings release. In the first quarter, VieMed reported net revenues of $23.8 million — up 31% from the prior year. Net income soared 117% year over year to $4.2 million, and adjusted EBITDA rose 76% to $7.9 million.

VieMed boasts a fantastic balance sheet and its well positioned to post solid growth going forward. Shares have soared to 52-week highs during the pandemic, but it looks like it has room to run in 2020 and beyond.

This stock is worth holding for decades to come

Park Lawn (TSX:PLC) is a funeral, cremation, and cemetery provider in North America. It has established itself as a dominant player in this growing industry. Moreover, North America’s aging population will inevitably lead to increased demand for deathcare services in the years to come. These are some of the reasons I’d recommended Park Lawn in April.

The small-cap stock has climbed 22% month over month as of close on June 8. In the first quarter of 2020, Park Lawn reported revenue of $73.9 million compared to $50.1 million in the prior year. Adjusted EBITDA increased 45.6% year over year to $17.1 million.

Park Lawn possesses an excellent balance sheet, which has powered its aggressive acquisition strategy in the industry in recent years. Shares last had a favourable P/B value of 1.2. Park Lawn declared a monthly dividend of $0.038 per share in May, which represents a 1.8% yield.

This small-cap stock had a roller-coaster ride finish to the 2010s

Pollard Banknote (TSX:PBL) is a Winnipeg-based company that manufactures and sells a range of gaming products and services for the lottery and charitable gaming industries worldwide. Shares of this small cap have climbed 17% month over month. The company released its first-quarter 2020 results on May 6.

Sales at Pollard hit $102.2 million compared to $97.5 million in the prior year. The company’s lottery business lines generated good volumes of instant tickets, even with the COVID-19 pandemic providing headwinds. A weak Canadian dollar offset gains in Q1, so the strengthening of the dollar in recent weeks should provide a boost going forward.

The company still boasts solid growth potential in the reliable lottery space. Shares are still down 10.9% in 2020 so far. This small cap still offers decent value after its Q1 earnings release.

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 Ambrose O'Callaghan has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Viemed Healthcare Inc.

More on Dividend Stocks

A worker uses a double monitor computer screen in an office.
Dividend Stocks

TFSA Investors: 2 Winning Buy-and-Hold Forever Stocks in April 2024

Buy-and-hold stocks are easy enough to find if you limit yourself to dividends, but there are at least a few…

Read more »

worry concern
Dividend Stocks

Telus Stock Is Down to its Pandemic Low of Below $22: How Low Can it Go?

Telus stock is down 37% in two years and is trading near its pandemic low, making investors wonder how low…

Read more »

money cash dividends
Dividend Stocks

Portfolio Payday: 3 TSX Dividend Stocks That Pay Monthly

After adding these three TSX dividend stocks to your portfolio, you can expect to receive attractive monthly income for years…

Read more »

Dividend Stocks

The Top Canadian REITs to Buy in April 2024

REITs with modest amounts of debt, like Killam Apartment REIT (TSX:KMP.UN), can be good investments.

Read more »

Technology
Dividend Stocks

The Smartest Dividend Stocks to Buy With $500 Right Now

Some of the smartest buys investors can make with $500 today are stocks that have upside potential and pay you…

Read more »

Various Canadian dollars in gray pants pocket
Dividend Stocks

2 Dividend Stocks to Buy in April for Safe Passive Income

These TSX Dividend stocks offer more than 5% yield and are reliable bets to generate worry-free passive income.

Read more »

protect, safe, trust
Dividend Stocks

How to Build a Bulletproof Monthly Passive-Income Portfolio With Just $1,000

If you've only got $1,000 on hand, that's fine! Here is how to make a top-notch, passive-income portfolio that could…

Read more »

Senior Couple Walking With Pet Bulldog In Countryside
Dividend Stocks

CPP Insights: The Average Benefit at Age 60 in 2024

The average CPP benefit at age 60 in average is low, but claiming early has many advantages with the right…

Read more »