2 TSX Small-Cap Stocks to Invest in June 2023

Even fundamentally good long-term picks are not immune to seasonal market dynamics and become more attractive in certain markets.

| More on:
analyze data

Image source: Getty Images

“Safety” is a relative term when it comes to stocks. No stock can be termed perfectly safe, no matter how stable the company it represents. But several factors influence how safe a stock may be, including the industry the company belongs to, its position in the industry, finances, etc. While market capitalization is not a factor per se, most conservative investors prefer to stick to large-cap, blue-chip stocks.

These are mature stocks with a strong market presence and a reliable customer base. The market capitalization is typically larger than $10 billion (large-cap requirement). However, this excludes a significant portion of the stock market.

If you want to choose from the broadest pool of stocks to find a good fit for your portfolio, there are a few good choices available in the lower tier of the market capitalization (small cap). Two of them stand out from the rest.

A healthcare stock

Healthcare businesses may seem evergreen, but there is a lot of variation among the different types of healthcare stocks. Some of them may offer consistent performances, while others provide sporadic bursts of growth that investors can capitalize upon. WELL Health Technologies (TSX:WELL), which doesn’t fit neatly in either category and combines healthcare and tech, is still a compelling pick.

The stock is currently trading at a 45% discount from its 2021 peak. The market capitalization is at $1.13 billion, putting it squarely in the centre of the small-cap pool. The discount would have been more profound if the stock hadn’t made a decent recovery in 2023. It has risen by about 71% since the beginning of the year.

The company has developed an extensive network of clinics and over 22,000 healthcare providers in Canada and the United States. It’s a strong and established player in the telehealth industry, and once this particular segment of the healthcare sector gains more traction, Well Health may emerge as a powerful investment.

It has already displayed the potential for powerful growth in the right market conditions by growing almost 1,700% in the two years between Jan. 2019 and Jan. 2021.

  • We just revealed five stocks as “best buys” this month … join Stock Advisor Canada to find out if WELL Health made the list!

A wellness-themed consumer staples stock

Jamieson Wellness (TSX:JWEL) is Canada’s major natural health products company. It covers the full lifecycle of these products — i.e., from manufacturing to distribution, and has multiple brands under its banner.

This includes Jamieson’s own brand, which has been operating in the country for nearly a century and develops a wide range of natural health products, including vitamin supplements, cough support, and plant-based proteins.

It also has a U.S.-based beauty and wellness brand, a well-known immune support brand, and a protein/supplement brand for athletes.

This small-cap stock has gone through multiple growth cycles in the last five years alone. It’s currently discounted, so buying now and waiting for the next long-term bull market to manifest can give you a decent chance at modest capital appreciation. The company also offers dividends, which augments its return potential.

Foolish takeaway

The two small-cap stocks are leaders in their respective market segments, a characteristic of larger blue-chip stocks. Jamieson, even though it’s a relatively new stock, represents a company that can trace its roots back a hundred years, while Well Health is equipped to benefit from the next phase of the healthcare sector’s evolution.  

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 Adam Othman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

More on Dividend Stocks

Canadian Dollars
Dividend Stocks

Buy 734 Shares of This Top Dividend Stock for $9,574 a Year in Passive Income

Are you looking to earn regular income? Now is an opportune time to buy Dividend Aristocrats at discounts and accelerate…

Read more »

A plant grows from coins.
Dividend Stocks

This Ultra-High Yield Stock Just Hit a 52-Week Low, and it’s Still a Buy Today

Enbridge Inc (TSX:ENB) stock recently hit a 52-week low. Here's why.

Read more »

Payday ringed on a calendar
Dividend Stocks

This 6% Dividend Stock Pays Cash Every Month

Are you looking to earn cash every month from October 15 onwards? This 6% dividend stock gives you monthly payouts.

Read more »

Person slides down a stair handrail
Dividend Stocks

With a 7.6% Dividend, This TSX Stock Is One to Buy Now and Hold for Decades

Now is an opportune time to invest in this no-brainer TSX stock and get +$30 extra dividend for decades on…

Read more »

Portrait of woman having fun in the street.
Dividend Stocks

CPP Benefits Will Be Higher for Millennials and Gen Z

Older Canadians won't get enhanced CPP, but they may invest in dividend stocks like Royal Bank of Canada (TSX:RY).

Read more »

A plant grows from coins.
Dividend Stocks

The Best Dividend Stocks in Canada Right Now

Seeking to give a boost to your income portfolio, consider investing in these best Canadian dividend stocks.

Read more »

A close up image of Canadian $20 Dollar bills
Dividend Stocks

Retirees: Want Fast-Growing Passive Income? Here Are 3 Long-Term Dividend Stocks

Are you looking for dividend stocks that can grow their distributions very quickly? Here are three long-term picks!

Read more »

dividends grow over time
Dividend Stocks

2 Top Dividend Stocks You Can Buy and Hold Forever

The market is full of great dividend stocks, but not all are long-term gems. Here are two options that you…

Read more »