If you want to beat the markets consistently over the long run, it’s in your best interest to look to some of the lesser-known names that are off the radar of the folks on Wall and Bay Street. You see, such small- and mid-cap stocks not only have more room to run, but they also are off limits for some of the big-league hedge funds that have more than enough funds to gobble them up entirely.
The small caps, while thinly traded versus their bigger brothers on the TSX Index, are great to hold for retail investors with long-term time horizons. While such small-cap names tend to be choppier rides, I think the roller-coaster ride of emotions is worth the shot at outsized gains over the long term, especially in an environment that calls for lower prospective returns moving forward.
So, without further ado, let’s get into my favourite under-$15 TSX stocks.
BlackBerry: The busts and booms have been even bigger thanks to WallStreetBets
BlackBerry (TSX:BB)(NYSE:BB) is a magnificent business that I’ve been pounding the table on for most of 2020. I’ve urged investors to stand by its terrific CEO (and proven turnaround artist) John Chen through the profound COVID-19 headwinds, also noting that the name would likely be bountiful for venturesome and patient long-term investors.
BlackBerry stock was ripe for picking back at $5 and change. After the stock exploded, thanks in major part to the frenzy going on at popular subreddit WallStreetBets, made famous for its short squeeze on shares of GameStop, the stock became too hot to handle. Despite the continued turnaround efforts and promising catalysts, including project IVY, the stock became a trader’s playground.
After the recent +50% crash in BlackBerry stock, though, I think the stock is worth picking once again. Not because WallStreetBets might drive shares higher again, but because the business is actually fundamentally sound with an attractive valuation at around $15.
Goodfood Market: Riding high on pandemic tailwinds
Goodfood Market (TSX:FOOD) is the ultimate hedge against a worsening of this pandemic. While COVID-19 vaccines could end this pandemic in a matter of months, I wouldn’t rule out the potential for negative surprises that could prolong this pandemic. COVID-19 variants and vaccine logistical issues are concerning. And although I wouldn’t take drastic action by going all-in on COVID-19 resilient stocks, I would encourage investors to scoop up a name like Goodfood if they’re courageous enough to place a bet on a reopening play like Cineplex that depends on a timely end to this horrific crisis.
Like a balanced barbell, I’d pair-trade a pandemic-resilient name like GoodFood and a pandemic-hit name like Cineplex to manage risks brought forth by COVID-19. Once the pandemic ends, Goodfood could take a sales hit, but I still think the stock is worthy of buying on dips for the long-term growth profile.
Fire & Flower Holdings: My favourite cannabis retailer to play the budding marijuana market
Fire & Flower (TSX:FAF) is probably the stock you’re least likely to have heard of. The stock trades at $0.87 and is a terrific way to bet on the cannabis retail market. Convenience store kingpin Alimentation Couche-Tard (the firm behind Circle K stores) clearly sees something in the Fire & Flower brand; otherwise, it wouldn’t have dealings with the firm.
I think Couche is right on the money and think Fire & Flower is a top pick for its incredible omnichannel presence, which I believe blows away the competition in the legal marijuana scene. The stock trades at 1.8 times sales, which is ridiculously low, given the firm’s longer-term growth potential.
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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. David Gardner owns shares of GameStop. The Motley Fool owns shares of and recommends ALIMENTATION COUCHE-TARD INC. The Motley Fool recommends BlackBerry, BlackBerry, and Goodfood Market.