The Motley Fool

3 Small-Cap Stocks With Big-Cap Potential

Hand arranging wood block stacking as step stair with arrow up.
Image source: Getty Images

Are you looking for small-cap stocks with big-cap potential?

If so, you might just be in luck.

While truly promising small caps are rare, they do exist. Every big company had to start somewhere, and tomorrow’s big companies exist somewhere today. With that in mind, here are three small-cap stocks that could someday become big caps.

HIVE Blockchain Technologies

HIVE Blockchain Technologies (TSXV:HIVE) is a Canadian crypto mining company with a $1.5 billion market cap. That places it squarely in small-cap territory. HIVE makes money by mining and selling Bitcoin and Ethereum. It does so in cold-climate data centres in Iceland, Sweden, and northern Canada. The cold climates in these regions reduce electricity consumption related to cooling, which helps keep costs down. HIVE’s most recent quarter was a big win, with $13.7 million in income from currency mining (up 174%), $13.7 million in cash flows, and $0.05 in EPS (up 400%). It was a stellar quarter by just about every metric, and as long as crypto keeps rallying, HIVE will probably keep posting amazing results.

Docebo

Docebo (TSX:DCBO)(NASDAQ:DCBO) is a Canadian e-learning startup that develops software for employee training. Its core product is an online learning platform that lets companies create self-directed training.

DCBO stock went on a big rally in 2020. When COVID-19 came on the scene, companies had to transition to a work-from-home model to keep up with the public health regulations. That led to a surge in interest in remote work services like Docebo’s software, which allows companies to train employees at home.

How is Docebo doing financially?

Well, in its most recent quarter, it delivered the following:

  • Revenue: $75.6 million (up 76%).
  • Subscription revenue: $23.6 million (up 76%).
  • Gross profit: $20.5 million (declined).
  • Net loss: $7.2 million (increased as a percentage of revenue).

As you can see, the quarter was a pretty mixed picture. Basically, revenue increased but expenses increased even more. That might seem alarming, but this kind of thing is quite common for tech companies fresh out of their IPO. As long as DCBO is financially responsible, it should have a bright future ahead of it.

WELL Health

WELL Health Technologies (TSX:WELL) is a healthcare company that supports healthcare practitioners and their patients. Its main service is telehealthcare, but it has a variety of assets including the following:

  • A chain of health clinics in B.C.
  • A number of omni-channel health businesses.
  • A gastroenterology anesthesia company.
  • An electronic medical record service.
  • And more.

It’s a pretty broad collection of healthcare assets, but the big theme is improving healthcare delivery in Canada. And it seems to be working. In its most recent quarter, WELL delivered phenomenal results:

  • $61.8 million in revenue (up 484%).
  • $11.9 million in adjusted EBITDA (up from a loss).
  • $30.2 million in gross profit (up 615%).
  • 559,000 patient visits (up 173%).

Those are pretty good results overall. The growth rate in sales was just phenomenal, and the company was even profitable by some metrics. Over the last five years, WELL has rallied by thousands of percentage points due to results like these. It’s been a great run, and the best may still be to come.

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 Andrew Button has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Docebo Inc.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss an important event.

Iain Butler and the Stock Advisor Canada team only publish their new “buy alerts” twice a month, and only to an exclusively small group.

This is your chance to get in early on what could prove to be very special investment advice.

Enter your email address below to get started now, and join the other thousands of Canadians who have already signed up for their chance to get the market-beating advice from Stock Advisor Canada.