4 Top TSX Small-Cap Stocks to Buy Right Now

Expected economic expansion and uptick in demand is likely to drive small-cap stocks in 2021.

Sneha Nahata

Sneha is a M.Sc. in finance and has been a Motley Fool contributor since mid-2020. Sneha specializes in writing about bank, energy, consumer and TMT (technology, media, and telecom) stocks. She focuses on identifying winning long-term stock picks.

Published February 2, 2021 3:30 pm EST

The expected economic expansion and uptick in demand provide a strong underpinning for growth for small-cap companies in 2021. The recovery in earnings and market share growth could help small-cap companies to deliver outsized returns.

Jamieson Wellness

Jamieson Wellness (TSX: JWEL) has consistently delivered strong returns over the past several years. The leading health and wellness company’s solid organic sales, market share growth, international expansion, and continued demand are likely to drive earnings and, in turn, its stock in 2021. Further, its accretive acquisitions of established brands are likely to accelerate its growth.

I believe the elevated consumer demand for protein and other wellness products amid the COVID-19 pandemic is likely to drive Jamieson Wellness’s revenues in the domestic and international market. Further, the company is likely to benefit from the market share growth in China and the expansion of domestic distribution channels.

Its revenues and adjusted EBITDA have grown at a double-digit rate over the past three years. Meanwhile, the strong sectoral tailwinds suggest that Jamieson’s revenues and EBITDA could continue to grow at a double-digit rate in 2021 and beyond.

Dye & Durham

Dye & Durham (TSX: DND) stock is expected to benefit significantly from the uptick in economic activities and easing lockdown measures. Its stock has decreased by about 14% this year, which provides a good entry point for long-term investors.

I believe Dye & Durham stock is likely to benefit from its strong customer base and long-term contractual arrangements with top clients. Its appetite for opportunistic acquisitions is likely to accelerate its revenue and EBITDA growth rate in 2021 and drive its stock.

Dye & Durham announced three acquisitions since December 2020, which is expected to diversify its business, increase its global scale and bolster its growth. Further, its strong balance sheet and higher cash and debt capacity indicate that Dye & Durham could continue to pursue strategic acquisitions in the coming years.

goeasy

I believe the recovery in consumer demand is likely to support the rally in goeasy (TSX: GSY) stock in 2021. Vaccine distribution and economic expansion are expected to drive goeasy’s loan portfolio and provide a strong base for growth.

The subprime lender’s bottom line has increased at a strong double-digit rate over the past 19 years, and I expect the momentum to sustain in 2021. Improvement in loan origination rate, new products, and channel expansion is likely to drive goeasy’s top and bottom line.

Thanks to its high-quality earnings base, goeasy is likely to boost its shareholders’ return through higher dividend payments in 2021.

Real Matters

Real Matters (TSX: REAL) stock has dropped more than 42% in six months, despite the strong industry tailwinds. While the decline in its stock presents an excellent opportunity to buy, the company is likely to benefit from a lower interest rate.

I believe the interest rates are likely to stay low for an extended period, which is likely to drive refinancing volumes and support its market share growth. Meanwhile, a large addressable market and its blue-chip customer base are expected to support its growth in 2021.