Companies that trade between market caps of $50 million and $300 million are called micro-cap stocks. These companies generally fly under the radar due to low trading volumes and marginal media coverage.
A micro-cap company may operate as a start-up and can also offer innovative products and solutions to customers. But investing in micro-cap stocks is quite risky due to their small size and extreme share price volatility. However, these stocks may also offer investors the opportunity to deliver exponential gains and generate outsized returns.
Here are two such up-and-coming Canadian microcap stocks to keep an eye on.
GreenPower Motor stock
A company operating in the clean energy space, GreenPower Motor (TSXV: GPV) is valued at a market cap of about $100 million. It designs, manufactures, and distributes medium- and heavy-duty electric vehicles (EVs) for commercial use in the U.S. and Canada.
In the fiscal fourth quarter (Q4) of 2023 (ended in March), it delivered more than 120 vehicles, which was a quarterly record for the company. Moreover, GreenPower delivered its first refrigerated box truck, which is a revolutionary offering as it gets power directly from a high-voltage battery. The truck is also 20% more efficient and 10% lighter compared to similar vehicles sold in the U.S.
Last month, GreenPower confirmed it received a US$15 million order from West Virginia to deliver 41 all-electric school buses. The U.S. state has already provided a US$3 million deposit for this deal. In the last seven months, 15 school districts have deployed GreenPower’s vehicles, and these repeat orders were celebrated by investors.
GreenPower is on track to increase sales from $23 million in fiscal 2022 to $110.3 million in fiscal 2024. Its adjusted loss per share is forecast to narrow from $0.92 to $0.28 in this period.
Priced at 0.8 times 2024 sales, GPV stock is trading at a discount of 150% to consensus price target estimates.
Hive Blockchain stock
Investors bullish on Bitcoin (CRYPTO: BTC) and cryptocurrencies can consider buying shares of Hive Blockchain (TSXV:HIVE). The company mines Bitcoin, which is the largest cryptocurrency in the world. Despite its volatility, Bitcoin has outpaced most other asset classes to deliver staggering gains to long-term investors.
The stock prices of crypto mining companies are closely tied to the cryptocurrency they mine. So, while BTC prices are down 60% from all-time highs, shares prices of HIVE stock have lost 88% since early 2021.
Hive Blockchain was among the first crypto-mining companies to go public. It also claims to be the first digital asset miner to buy data centres, develop its own application-specific integrated circuit mining rig, and mine Bitcoin with clean energy.
In fiscal Q3 of 2023 (ended in December), Hive Blockchain reported revenue of US$14.3 million and adjusted earnings before interest, tax, depreciation, and amortization of US$1.5 million. It mined 787 Bitcoin at an average cost of US$13,634 per BTC in the quarter. Since 2021, its selling and administrative costs are around 9% of total sales, which is the lowest among peers.
The company now holds 2,372 BTC on its balance sheet, up from 1,813 BTC at the end of 2021. You can expect the TSX stock to regain momentum once Bitcoin prices recover over time.
