2 Top Little-Known Growth Stocks Under $3

The Score Media and Gaming Inc. (TSX:SCR) and another intriguing Canadian small-cap stock currently trades at less than $3.

| More on:
Growth from coins

Image source: Getty Images

If you’re a young investor who’s hungry to beat the markets at their own game, you should look to the mid-cap universe for greater growth.

Not only can you land higher growth potential with some of Canada’s lesser-known small- and mid-cap stocks, but your odds of buying shares at a wide discount to their intrinsic value range increases. Be careful not to bet the farm on penny stocks, though, because there are ample value traps out there that you could stumble into if you don’t put in the due diligence beforehand.

Micro- and small-cap stocks may get a bad rap for being absurdly volatile plays that could lead to steep losses over a very concise timeframe. But if you’re a young investor with a long-term time horizon and have the capital to work on put on such riskier, lesser-known names, it may be a wise idea to scoop up shares of companies that could evolve to become the next big thing. At least consider doing so with a small portion of your portfolio!

Please do be mindful of the downside risks. To repeat what your financial adviser has probably told you ad nauseam: “higher rewards tend to come with higher risks.”

Without further ado, consider shares of up-and-coming sports-betting play Score Media and Gaming (TSX:SCR) at $3 and budding cannabis retailer Fire & Flower (TSX:FAF) at $0.81. Score and Fire & Flower sport $1.3 billion and $172 million market caps, respectively.

While both companies are prone to wild double-digit percentage swings, I think that young investors, like millennials, have a lot to gain by stashing the following names in their portfolios, as they forget about them for years at a time.

Score Media and Gaming

If you’re looking to improve your chances of scoring (please forgive the pun!) multi-bagger gains, you’ve got to take a page out of Wayne Gretzky’s playbook by skating to where you think the puck is headed next, rather than skating to where the puck is at right now. By doing so, you, like the Great One, can improve your chances of shooting a one-timer in the back of the net.

The same goes with The Score, a lesser-known way to play the rise of legalized sports betting. While The Score’s fundamentals may not be incredible today, there’s no denying the firm’s longer-term growth potential. It’s the growth story that has investors excited, and although shares are up over 330% since November, I think there’s still room for the stock to run as the firm looks to go in on a breakaway in a market sports-betting scene.

Fire & Flower

Fire & Flower is a small-cap stock with its market cap just north of $100 million. As you may know, such smaller-cap stocks, while capable of greater gains are riskier. With Fire & Flower, though, I believe such risks are lower than most other stocks with similar-sized market caps. Why? The budding cannabis retailer has Alimentation Couche-Tard, an established blue-chip behemoth, standing in its corner.

The cannabis retail business is highly competitive. With the potential for a future takeover and an opportunity to leverage Couche-Tard’s retail expertise, I think FAF stock is far less risky than its small market cap would suggest.

The stock trades at just 1.8 times sales at the time of writing, which is a pretty low price to pay for a firm with a competitive advantage (its dealings with Couche-Tard) up its sleeves.

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 Joey Frenette owns shares of ALIMENTATION COUCHE-TARD INC. The Motley Fool owns shares of and recommends ALIMENTATION COUCHE-TARD INC.

More on Tech Stocks

potted green plant grows up in arrow shape
Tech Stocks

2 Growth Stocks to Invest $1,000 in Right Now

Are you looking for growth stocks to add to your portfolio? Here are two top picks!

Read more »

A shopper makes purchases from an online store.
Tech Stocks

Is Amazon a Black Friday Buy?

Last year, Amazon reported record Black Friday weekend sales. This year, the company has to contend with consumers who have…

Read more »

gaming, tech
Tech Stocks

Better Gaming Buy: Take-Two Stock or Electronic Arts?

Investors looking to add a gaming stock to their portfolios might consider buying Take-Two or Electronic Arts.

Read more »

A worker uses the cloud for paperless work. tech
Tech Stocks

2 Tech Stocks to Buy Before a Rebound in 2023

These two tech stocks with strong earnings and winning business models will likely lead the sector’s rebound in 2023 when…

Read more »

analyze data
Tech Stocks

3 Date Night Ideas That Could Actually Help You Invest

If you're missing out on this opportunity to invest in a down market, your date night ideas could be to…

Read more »

grow dividends
Tech Stocks

TFSA Investors: Here’s Where to Park That Higher $6,500 Contribution

Here's why TFSA investors may want to consider Shopify (TSX:SHOP) as a long-term holding in this growth-focused fund right now.

Read more »

Car, EV, electric vehicle
Tech Stocks

Is Now the Time to Buy Electric Vehicle Stocks?

Here’s why this could probably be the best time for Canadian investors to buy electric vehicle stocks.

Read more »

Man holding magnifying glass over a document
Tech Stocks

Smart Investors Are Buying and Holding These 2 Supercharged Stocks

Smart investors should look more closely at these tech stocks as potential buy-and-hold ideas for supercharged growth.

Read more »