3 TSX Small Caps to Buy in August for High Growth Potential

These small-cap stocks are the perfect option for investors seeking growth and dividends from the TSX.

Growth stocks continue to dominate on the TSX, with shares of many companies climbing higher and higher. However, not all of them are considered cheap. That’s why today, I’m going to look at three companies with small market capitalizations for investors to consider.

A plant grows from coins.

Source: Getty Images

Artis REIT

Artis Real Estate Investment Trust (TSX: AX.UN) has a market capitalization of $1.32 billion, marking just within small-cap territory. Now, there is a plus and a minus of owning Artis stock. The plus side is that it’s involved in industrial properties. This is ideal for those seeking exposure to the growing area of e-commerce, especially when inflation and interest rates get under control.

It also invests in office properties, and this could be seen as a downside. Artis could continue to experience a slow rise in office use as people return to work. But it’s yet to be determined whether workers will return completely. Still, Artis remains a great buy with shares trading at 4.6 times earnings, and a juicy 5.19% dividend yield. Shares of Artis stock are currently down 1.3% year-to-date.

Calian Group

Getting smaller, Calian Group (TSX: CGY) is another great option among small-cap TSX stocks, and is a growth stock with a $678-million market cap. The engineering company provides software and other products and services to the health, defence, security, and aerospace industries. Many of their solutions are secured with long-term contracts, allowing the company to see slow but steady growth.

Now, the company isn’t in value territory among growth stocks, trading at 50.7 times earnings. However, it does offer a potential upside of 38% as of this writing to reach the consensus target price among analysts. Further, you can add on a 1.85% dividend yield. Shares remain down by just 1.63% year-to-date as of this writing.

Extendicare

Of the three small-cap growth stocks I’d recommend, Extendicare (TSX: EXE) is probably at the top. The $650-million company is a great long-term buy, offering investors a strong hold for decades. Even at today’s expensive price trading at 91.5 times earnings.

Why? There are a few reasons. Extendicare is at the forefront of the long-term care industry. This industry has been growing exponentially in the last few years due to the large, aging baby boomer population. Right now, companies like Extendicare offer exposure to this continuously expanding industry.

Today, Extendicare is one of the growth stocks offering a tasty dividend yield of 6.5% as of this writing. And shares are actually up 4.3% year-to-date. So during a market rebound, this company could perform quite well in pretty much any portfolio.

Bottom line

The market is starting to recover, with inflation falling and stocks climbing. These three small-cap stocks offer you exposure to industries that are likely to recover now, and decades beyond. All while providing you with a strong dividend to boot. Consider buying these growth stocks now before they climb even higher on the TSX today.

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends Calian Group Ltd.

More on Tech Stocks

Data Center Engineer Using Laptop Computer crypto mining
Tech Stocks

Hammond Power Solutions Is Positioned for the Big Data Centre Buildout: Here’s How I’d Buy It

Analyze the current issues impacting data centres, from AI investment strategies to concerns reminiscent of past financial crises.

Read more »

horses compete to win race
Dividend Stocks

Telecoms Were Monday’s Worst TSX Sector: This One Yields 4.5%

Rogers offers a meaningful dividend yield, with debt reduction providing the clearest test of the investment case.

Read more »

The RRSP (Canadian Registered Retirement Savings Plan) is a smart way to save and invest for the future
Dividend Stocks

Can You Have a TFSA, RRSP and FHSA at the Same Time? Yes. Here’s How They Fit Together

These three accounts can work together, with the FHSA serving a home purchase, the TFSA offering flexibility, and the RRSP…

Read more »

A robotic hand interacting with a visual AI touchscreen display.
Tech Stocks

BlackBerry Stock Jumped 8% On Tuesday: What’s Going on ­– and Is It a Buy?

A growing QNX royalty backlog provides a solid base for future growth and is likely to support BlackBerry’s business.

Read more »

A shopper makes purchases from an online store.
Tech Stocks

What Investors Need to Know About Owning U.S. Stocks in a TFSA

Do you own U.S. stocks in a TFSA? Learn how the 15% dividend withholding tax works, why Amazon pays none,…

Read more »

The virtual button with the letters AI in a circle hovering above a keyboard, about to be clicked by a cursor.
Tech Stocks

I’d Keep Constellation Software Stock Despite its 3% Organic Growth: Here’s Why

Constellation Software's acquisition strategy has driven the company's success. The growth runway remains strong.

Read more »

data center server racks glow with light
Tech Stocks

AI Data Centres Need Power: This Canadian Stock Just Won a 1GW Contract

Enerflex has landed substantial data centre equipment work. The opportunity now depends on what reaches shareholders after delivery.

Read more »

man makes the timeout gesture with his hands
Tech Stocks

The Tax Rules Canadians Should Know Before Starting a Side Hustle

A side hustle can fund investments, but taxes, business expenses, and sales-tax obligations determine how much money is actually yours.

Read more »