If you’re looking to grow your wealth over the long term, small-cap stocks can be an exciting place to invest. While these Canadian companies do not have the brand recognition of larger companies, they offer significant growth potential. Because they’re still in the early stages of their business journey, small-cap stocks can deliver impressive returns as they scale and gain higher market share. Moreover, you can start buying these stocks for as little as $500.
That said, investing in small caps carries higher risks. These stocks tend to be more volatile and can be hit harder during market volatility. That’s why it’s essential to look for companies with solid fundamentals and significant growth opportunities.
With that in backdrop, here are two no-brainer small-cap stocks to buy right now for less than $500.
Small-cap stock #1
5N Plus (TSX:VNP) is one of the most promising small-cap stocks to buy right now for less than $500. It is a leading producer of specialty semiconductors and performance materials — components that are essential in some of the fastest-growing industries.
Over the past three years, 5N Plus stock has delivered a stellar return of 474%, reflecting its solid financial performance.
The company operates globally and is a market leader in the majority of markets it serves. 5N Plus will also benefit from its long-standing relationships with clients, the high-value nature of its products, and its dominance in several niche markets, such as terrestrial renewable energy, space-based solar power, advanced imaging and sensing, and healthcare.
In addition, 5N Plus is one of the top suppliers of ultra-high-purity specialty semiconductor materials outside of China. The ultra-high-purity specialty semiconductor has applications in a wide range of critical technologies, offering significant growth opportunities.
5N Plus recently reported impressive year-over-year revenue growth, driven by strong sales in the terrestrial renewable energy and space solar power markets, as well as increased demand for its bismuth-based products. The company’s unique role as a key supplier to critical industries, along with its expanded manufacturing capabilities, positions it well for continued growth.
5N is well-positioned to navigate the potential challenges from the macro uncertainties. Moreover, with its unique product offerings and strong market positioning in rapidly growing sectors, 5N Plus has solid long-term growth potential.
Small-cap stock #2
ADENTRA (TSX:ADEN) is another attractive small-cap stock to buy right now. As one of the leading distributors of architectural building products, ADENTRA is strategically positioned in a large and fragmented industry, giving it substantial room to grow and consolidate its presence.
The company is facing short-term challenges, including high U.S. mortgage rates and economic uncertainty, which are likely to impact its performance and stock price. However, ADENTRA’s fundamentals remain strong. It operates on a price pass-through model, enabling it to adjust selling prices in response to cost pressures, including tariffs. This flexibility helps preserve margins and supports revenue. Additionally, the company’s expansive global sourcing network, covering 30 countries, ensures a steady and diversified product supply that caters to a broad customer base.
ADENTRA is also focused on improving efficiency, tightening inventory turnover, lowering its leverage, and streamlining processes. These measures will help the company weather near-term volatility and lay the foundation for sustainable growth.
Demographic trends, such as aging housing stock and continued structural underbuilding, support steady demand for its products. Furthermore, its diversified portfolio, extensive market presence, and strong supplier relationships augur well for growth.
In addition, ADENTRA’s exclusive products and expansion of its in-house brands enhance its margin profile and customer loyalty. Its break-bulk logistics capabilities also allow for more efficient distribution, giving it an operational edge. Further, its strategic acquisition strategy will help expand its product mix and customer base, opening the door to new high-margin markets and broadening its overall revenue potential.
