The Canadian stock markets have been roaring in 2021. Yet there are a number of small-cap growth stocks that are still trading under the radar for many Canadian investors. With small-cap stocks you have to think long term and be prepared for extra volatility. However, if you are patient, the returns over many years can be fantastic. If you want to buy some long-term trends with good upside, these four Canadian stocks trading under $10 per share could be interesting.
A Canadian technology growth stock
Sangoma Technologies (TSXV:STC) is a really intriguing Canadian stock for technology investors. Right now, the stock trades just above $4. However, it has some great catalysts for growth ahead. It is steadily becoming a leader in the unified communications space. It provides digital all-in-one communications-as-a-service offerings to businesses worldwide. Given work-from-home trends, Sangoma saw a large uptick in demand out of the pandemic.
The company is merging with a similar-sized omni-channel player called Star2Star in the United States. This should give it scale and new verticals to cross-sell and distribute its products/services. The transaction is expected to be immediately accretive. This company has strong competitive advantages against peers, a valuation discount, and a large growth runway ahead. It looks attractive today.
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An industrial innovator
H20 Innovation (TSXV:HEO) is steadily becoming a leader in water and wastewater treatment solutions. Today, the stock trades around $2.50 per share. This Canadian stock has some really attractive products and technologies that help municipalities and utilities better manage their water assets.
H2O is a great ESG stock, because it is helping customers better clean, preserve, and manage water. Clean potable water is increasingly become a scarce resource. H2O, as a mid-sized water company, is seeing continued growing demand for its high-quality filter products.
The company is consistently becoming more efficient and profitable. It is also has a fairly large market of acquisition consolidation possibilities. While it is early days, this Canadian industrial stock should have many years of steady growth ahead.
A Canadian stock revolutionizing online groceries
A Canadian growth stock that you might have heard of, especially during the pandemic, is Goodfood Market (TSX:FOOD). It had a nice run in 2020 but now sits at around $8.50 per share. Goodfood is one of the largest providers of meal kits and online groceries in Canada. While Canada still experiences COVID-19 lockdowns, many Canadians have looked to Goodfood for some weekly dining inspiration.
The company just reached $100 million in quarterly revenue. Likewise its gross margins just reached over 30%. It is not consistently profitable yet. However, it is investing heavily in production efficiencies, as well as expanding its scale and availability across Canada. With e-commerce becoming a more and more common part of our lives, Goodfood is setting up to become an online grocery provider of choice.
A TSX play on European housing
If you are looking for some diversity and income in your portfolio European Residential REIT (TSX:ERE.UN) is an attractive Canadian stock. It trades for $4.30 per share. This stock is traded on the TSX; however, 100% of its operations are in European markets like the Netherlands, Belgium, and Germany. It primarily focuses on residential real estate. These markets are incredibly attractive due to their strong rule of law, limited housing supply, and stable housing demand.
During the pandemic, the REIT hardly saw any negative impacts. Occupancy for residential properties stood at 98%, and rents grew by almost 4% in 2020. The company pays a 3.8% dividend and it just raised that payout by 5%. It still has lots of acquisitions in its pipeline, so it has some great growth opportunities ahead.
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 Robin Brown owns shares of ERE.UN, Goodfood Market, and Sangoma Technologies. The Motley Fool recommends Goodfood Market.