Small-capitalization stocks have the potential to compound over a long period, creating significant wealth for investors. However, these stocks can be risky, as the volatility in markets can quickly impact these companies. So, investors with higher risk-taking abilities and a longer investment horizon could invest in these stocks for superior returns. Meanwhile, here are the three small-cap stocks you can buy this year.
With the increased demand for its products amid the increased focus on health due to COVID-19, Jamieson Wellness (TSX:JWEL) had delivered impressive returns of over 40% last year. The company’s top line and bottom line increased by 17.2% and 21.3% in the first three quarters of 2020, respectively. Strong sales in both international and domestic markets drove the company’s financials during the period.
Meanwhile, the increased focus on healthy living, rising disposable income, and an aging population have created a long-term growth potential for Jamieson Wellness. The company is also making significant investments in increasing its production capacity to meet the increased demand. Moving to international markets, China continues to be its lead market. The company has acquired a leadership position among the international vitamin, mineral, and supplement (VMS) brands in China. Meanwhile, the company is also hoping to acquire its existing distributor by the end of 2022.
Amid the recent pullback, Jamieson Wellness is trading around 21.5% lower from its 52-week high, proving an excellent buying opportunity.
Amid the renewed interest in cannabis stocks and its impressive first-quarter performance, Hexo (TSX:HEXO)(NYSE:HEXO) has returned over 155% since the beginning of November. The company had outperformed analysts’ revenue expectations and narrowed down its net losses in the November-ending quarter. It was the sixth consecutive quarter of improvement in its adjusted EBITDA. The company’s financial position also looked healthy, with its working capital standing at $250.3 million at the end of the quarter.
Meanwhile, the upward momentum in HEXO’s stock price could continue, given the cannabis sector’s healthy growth prospects. The company’s Original Stash and Truss brands have helped the company acquire significant market share in hash and cannabis-infused beverage categories, respectively.
Further, the company is upping its expansion plans in other Canadian markets after acquiring a significant market share in Quebec. It has also relaunched its UP brand products in December, with more THC content and improved quality. Earlier this month, the company’s joint venture, Truss CBD USA, had launched a new line of non-alcoholic CBD beverages in Colorado. So, given its high-growth prospects, I am bullish on HEXO.
WELL Health Technologies
Last year, WELL Health Technologies (TSX:WELL) had returned over 415%, amid increased demand for its services due to the pandemic. During the pandemic, patients who were afraid to visit hospitals amid safety concerns had opted for telehealthcare services, driving the demand for WELL Health’s services.
The technological infrastructure allows patients to receive medical care anywhere, anytime, in a cost-efficient way. So, I believe telehealthcare services demand could sustain even in the post-pandemic world, benefiting WELL Health. The company has also expanded its telehealthcare service to the United States through the acquisition of Circle Medical.
Meanwhile, WELL Health is also expanding its EMR business through acquisitions. It currently services around 2,200 clinics in Canada, covering around 10,700 physicians. It also created a marketplace for digital health applications, which now has over 25 apps on it. So, given its high-growth prospects, I expect the upward momentum in WELL Health’s stock price to continue.
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.
The Motley Fool recommends HEXO. and HEXO. Fool contributor Rajiv Nanjapla has no position in any of the stocks mentioned.