When speaking of high-growth small-cap stocks, goeasy (TSX:GSY) crops up first in my mind. After all, goeasy has delivered exceptional returns in the past two decades. Apart from the growth in its stock price, goeasy has consistently paid regular quarterly dividends for more than a decade and has increased it for seven consecutive years.
Notably, goeasy stock has increased by 2,113% in the last decade. Meanwhile, it jumped by more than 305% in one year. So far this year, goeasy stock has appreciated by about 50%. The run-up in goeasy stock is backed by its robust top-line performance and solid double-digit growth in its bottom line. Thanks to its high-quality earnings, goeasy’s dividends have grown at a compound annual growth rate (CAGR) of 34% since 2014.
While goeasy remains well positioned to deliver outsized returns in the long run, here are two more small-cap stocks that I believe have the potential to make their investors very rich.
With a market cap of about $900 million, Absolute Software (TSX:ABST)(NASDAQ:ABST) stock is a top small-cap bet. The company’s financials are growing at a solid pace, thanks to the continued momentum in its base business. Meanwhile, increased spending on cybersecurity threats suggests that the demand for Absolute Software’s endpoint security software is likely to remain elevated. Furthermore, its revenues and adjusted EBITDA could continue to grow at a high double-digit rate.
Notably, the pace of growth in Absolute Software’s annual recurring revenues accelerated in the recent past, and I expect the momentum to sustain on the back of solid growth in its enterprise and government segment. Moreover, its growing international footprint and continued expansion of the education vertical are likely to accelerate its growth further. Absolute Software’s adjusted EBITDA has grown at a CAGR of 72% since FY18, while its customer retention rate remains very high.
Its stock is trading cheaper compared to peers and looks attractive at the current price levels. I believe the large addressable market, favourable industry trends, accelerating revenue growth rate, cross-selling and new product pipeline provide a strong base for future growth.
Canada’s leading online grocery company, Goodfood Market (TSX:FOOD), is another must-have small-cap stock in your portfolio. The online grocery industry is growing at a breakneck pace, providing multi-year growth opportunities for Goodfood Market. Notably, the Goodfood Market has consistently delivered robust sales on the back of increased adoption of online grocery services and has witnessed stellar growth in its active subscriber base.
I believe Goodfood Market’s capacity expansion, increasing product offerings, expansion of the national platform, and robust delivery capabilities position it well to drive active subscriber base and basket size. Meanwhile, strong secular industry trends, targeted marketing, increased order frequency, and a strong balance sheet should accelerate its growth rate further.
Goodfood Market stock has consistently outperformed the broader markets its returns. However, it witnessed a sharp selling in the recent past and fell over 37% in the three months. I believe the decline in Goodfood Market stock is an excellent opportunity to buy this high-growth company at an attractive price.
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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 Sneha Nahata has no position in any of the stocks mentioned. The Motley Fool recommends Goodfood Market.