A weekly look at some small-cap stocks making news – or about to.
Canada’s S&P/TSX Small Cap Index TXTW-I is up by about 20 per cent over the past 52 weeks. The index reached a record high of 930.54 in midday trading on Thursday. The Russell 2000 in the U.S. has increased by about 10 per cent over the past 52 weeks.
Small-cap summary
Small caps making news this week:
Canada Goose Holdings Inc. (GOOS-T) shares rose and hit a 52-week high on Thursday after a report that its controlling shareholder, Bain Capital, is considering a sale of its stake in the company.
Citing “people familiar with the matter,” Bloomberg reported that Bain is working with advisers as it considers selling part or all of its holding in Canada Goose.
“It has been gauging early interest from potential buyers, including other private equity firms, according to the people, who asked not to be identified because the information is private,” the Bloomberg report stated, adding that Bain acquired a controlling stake in Canada Goose in 2013 and listed the business in 2017.
At the end of March, Bain owned 60.5 per cent of Canada Goose’s multiple voting shares, an unlisted class of stock with 10 times the voting power of the company’s publicly traded shares, Bloomberg wrote, citing a regulatory filing. Its stake gives it 55.5 per cent of the voting power at Canada Goose.
The report said that deliberations are at a preliminary stage and there’s no certainty they will lead to a transaction. “Other shareholders could also consider joining Bain in a deal, according to some of the people,” it states.
It notes that representatives for Bain and Canada Goose declined to comment.
In the past 52 weeks, the stock has traded between a high of $18.57 and a low of $9.54.
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Richelieu Hardware Ltd.(RCH-T) reported second-quarter results that missed expectations.
During market hours on Thursday, the Montreal-based company reported sales of $512.2-million, up 6.4 per cent from $481.4-million last year. The expectation was for sales to come in at $515.6-million.
The company said the year-over-year sales increase for the quarter ended May 31 was due to both internal growth and acquisitions.
“Internal growth in the U.S. manufacturers’ market was supported by higher selling prices,” the company stated. “Starting in May, part of this internal growth came from price adjustments applied to reflect the new tariffs, representing essentially a cost pass-through with no impact on gross margin.”
The company stated that overall sales in Canada were stable, “reflecting good performance in the Eastern manufacturing markets, offset by a decline in Ontario due to a more challenging economic environment.”
Net earnings attributable to shareholders came in at $22.5-million, a decrease of 3.9 per cent from a year ago. Net earnings per share (EPS) came in at 41 cents, down a penny from a year ago and below expectations of 42 cents.
In the past 52 weeks, the stock has traded between a high of $43.20 and a low of $31.81.
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AGF Management Ltd. (AGF-B-T) announced changes to its leadership team following the recent and sudden death of its chief executive officer Kevin McCreadie.
Before markets opened on Thursday, newly appointed CEO Judy Goldring announced that Chris Jackson has been appointed president and chief operating officer, effective immediately. He has been a member of AGF’s executive management team since 2018.
David Stonehouse has been appointed interim chief investment officer and a search process for a new CIO has been initiated, the company stated.
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Canopy Growth Corp. (WEED-T) announced on Wednesday the appointment of Tom Stewart as interim chief financial officer, effective immediately. Mr. Stewart succeeds Judy Hong, who served as CFO since April, 2022.
Mr. Stewart joined Canopy Growth in 2019 as chief accounting officer after a decade in senior finance roles at Constellation Brands, Inc. Canopy Growth stated that it’s searching for a permanent CFO.
In the past 52 weeks, the stock has traded between a high of $11.89 and a low of $1.08.
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Theratechnologies Inc. (TH-T) reported lower revenue and swung to a loss for its second quarter.
Before markets opened on Wednesday, the specialty biopharmaceutical company reported revenue of US$17.7-million for the quarter ended May 31, down from US$22-million for the same quarter last year.
Its net loss was US$4.5-million compared to a net profit of US$987,000 a year ago.
Adjusted EBITDA was US$906,000 compared to US$5.5-million a year ago. The company said the decrease is mainly explained by higher spending lower revenues attributable to the supply shortage of its Egrifta medication.
Last week, the company announced a friendly deal to be taken over by CB Biotechnology LLC, an affiliate of Future Pak LLC.
In the past 52 weeks, the stock has traded between a high of $4.34 and a low of $1.59 on the TSX and between a high of US$3.20 and a low of US$1.12 on the Nasdaq.
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EQ Bank (EQB-T), the company behind Equitable Bank, has named former chief financial Chadwick Westlake as its chief executive officer as of Aug. 25.
Wednesday’s announcement came after previous CEO Andrew Moor died unexpectedly in June. Mr. Westlake was the bank’s CFO for nearly five years before he left in March to be CFO of enterprise software provider Open Text Corp.
Interim CEO Marlene Lenarduzzi will lead the bank until then and return to her role as chief risk officer, the company stated.
Read the Globe’s story here
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U.S. private equity funds and one of Canada’s largest pension plans are in talks to acquire H&R Real Estate Investment Trust (HR-UN-T) as an activist investor pushes the company to disclose bidders for its $10.5-billion property portfolio.
Last Friday, Toronto-based H&R disclosed that since February, it has received multiple proposals to buy all or part of the company, which owns residential, industrial, office and retail properties across Canada and the United States. The REIT’s board appointed a committee to evaluate the offers, advised by bankers and lawyers, but did not disclose the bidders.
Read the Globe’s full story here
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Firan Technology Group Corp. (FTG-T) reported second-quarter results that were ahead of expectations.
After markets closed on Tuesday, the aerospace and defence electronic products maker reported sales of $48.7-million, up from $38.8-million a year ago. The result was ahead of expectations of $47.9-million.
Net earnings of $3.5-million or 13 cents per share compared to $2.6-million or 11 cents a year earlier. The earnings per share beat expectations of 11 cents.
The quarter benefited from strong organic growth, favourable currency rates and an acquisition, Acumen Capital analyst Nick Corcoran said in a note. He increased his target to $15 from $12 and maintained his “buy” recommendation.
“We believe FTG remains insulated from near-term uncertainty related to the tariffs,” he wrote, citing the company’s stock ticker.
In the past 52 weeks, the stock has traded between a high of $12.42 and a low of $5.40.
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VitalHub Corp. (VHI-T) announced the acquisition of health care software provider Novari Health Inc. for $43.6-million in cash and shares, plus potential performance-based consideration.
The purchase price was $35.8-million in cash, subject to working capital adjustments and 733,726 common shares. The maximum amount payable under the all-cash performance-based earnout is $5-million over two years, the company stated.
Canaccord Genuity analyst Doug Taylor, who has a “buy” on the stock, increased his target to $13.50 from $13 after the announcement.
“The asset is a strong and logical fit alongside recently acquired Strata and the broader VitalHub portfolio,” he said in a note.
He said the valuation is slightly more expensive than VitalHub’s target, but that Novari brings “significant scale in a growth area of health care software spending.”
He also wrote that the valuation is well below VitalHub’s current sales multiple.
“Additionally, as VitalHub deploys its well-established integration playbook, including gaining efficiencies on R&D [research and development], we believe the company has a path towards a 20-per-cent-plus EBITDA margin for this asset in year 2.”
In the past 52 weeks, the stock has traded between a high of $12.72 and a low of $6.74.
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Well Health Technologies Corp. (WELL-T) shares rose this week after the company provided an update on its Canadian clinics business and its cost-savings initiatives.
The Vancouver-based company announced on Tuesday that it expects $450-milion in Canadian clinical revenue and $60-million in adjusted EBITDA.
While there wasn’t pre-existing formal guidance for the Canadian clinics, CIBC Capital Markets analyst Scott Fletcher said its previous estimates were for $405-million in revenue and $50-million in adjusted EBITDA.
“[The] guidance implies 13.3 per cent adjusted EBITDA margins in the Canadian clinical business, up from 12.8 per cent in 2024, supporting WELL’s plans of executing on the M&A pipeline without diluting margins,” he said in a note.
Mr. Fletcher increased his target to $5.25 and maintained his “neutral” (hold) rating.
Mr. Fletcher wrote that he’s most interested in the company’s Canadian assets, both on the clinical and digital side, but said its U.S. asset sales “and the clarity they would bring to the story, are the likely next catalyst” for the company.
However, he noted the timing of those sales remains uncertain.
The company also stated this week that it has expanded and extended its credit facility with Royal Bank of Canada to $200-million until 2027.
Well also stated in its July 8 release that its focus on the “digitization and modernization of its primary care clinics is resulting in a significant multi-million-dollar cost optimization initiative designed to improve efficiency and enhance operational excellence of its clinics across Canada.”
In the past 52 weeks, the stock has traded between a high of $7.36 and a low of $3.68.
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Dye & Durham Ltd. (DND-T) said this week that Plantro Ltd., an investment vehicle overseen by former Dye & Durham CEO Matthew Proud, has submitted a requisition seeking a special meeting of shareholders proposing to shake up ” a meaningful portion of the company’s recently refreshed board.”
The company stated that its board is working with independent legal counsel and advisors to review the validity of the requisition.
In a note, Canaccord Genuity analyst Robert Young wrote that Mr. Proud launched a campaign to encourage a sale of the company and announced a formal request for a special meeting to replace three of seven board members.
“Given poor sentiment and a likely long path to de-levering to under three [times] EBITDA, a sale process would be well received, in our view,” he wrote in the July 8 note.
He also lowered his target to $14.50 from $16 but kept his “buy” rating after adjusting his forecasts “to reflect the lack of meaningful recovery in Canadian real estate volumes, the likelihood of margin compression in the short term, and a higher risk of share loss following new license awards to access the Ontario Business Registry.
In the past 52 weeks, the stock has traded between a high of $22.59 and a low of $7.85.
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Quipt Home Medical Corp. (QIPT-T) announced the acquisition of a durable medical equipment company owned by Ballad Health for US$1.6-million plus the value of accounts receivable and inventory.
Quipt said the acquiree reported unaudited revenue of US$6.6-million for the fiscal year ended June 30, serving more than 12,500 patients annually through four branch locations across East Tennessee and southwest Virginia. The acquisition also includes a preferred provider agreement with Ballad Health.
“This acquisition is a strategic milestone for Quipt as it expands upon Quipt’s traditional acquisition model to form deeper partnerships with health care systems,” it stated.
“Overall, we are encouraged by the acquisition at what appears to be a favourable valuation, and the opportunity for additional deals that provide patient referrals through preferred provider agreements,” Canaccord Genuity analyst Richard Close, who has a “hold” and US$1.70 target, said in a note.
“As Quipt noted in [the] announcement, this acquisition could provide a repeatable playbook for additional health system aligned deals in the future, which the company had previously discussed as a strategic priority following their annual shareholder meeting in March.
He also highlighted in the July 7 note that the company hasn’t provided any updates on the outstanding offer from Forager Capital Management to take Quipt private at $3.10 per share.
In the past 52 weeks, the stock has traded between a high of $5.60 and a low of $1.90.
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Cascades Inc. (CAS-T) announced on Tuesday that it will permanently close its facility in Niagara Falls, New York, as part of the restructuring of its packaging production platform.
“This announcement aligns with the company’s commitment to support strategic growth by focusing on profitability and customer service levels,” it stated in a July 8 release.
Cascades said the site had an annual production capacity of 200,000 short tons. A second machine at this facility was closed in 2023. Closure costs are estimated at approximately $5-million. The company stated that 123 employees will be directly affected.
“While we expect the optimization of the packaging segment will contribute positively to margins, we view it as a mixed development as it underscores tepid end market demand in the near-term,” National Bank analyst Zachary Evershed said in a July 8 note. He maintained his “sector perform” (hold) rating and $10 target.
In the past 52 weeks, the stock has traded between a high of $13.42 and a low of $8.30.
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Royal Gold Inc. (RGLD-Q) announced friendly takeover bids for Sandstorm Gold Ltd. (SSL-T) and Horizon Copper Corp. (HCU-X) in a $5-billion transaction that will create one of North America’s largest gold royalty companies.
Early Monday, Royal announced a US$3.5-billion, all-share bid for Sandstorm and a separate $196-million cash bid for Horizon, both of which are based in Vancouver. Sandstorm is the largest shareholder in Horizon, with a 34-per-cent stake.
Read the Globe’s full story here
TD Securities analyst Derick Ma downgraded Sandstorm Gold to “sell” and recommended that investors tender their shares to Royal Gold’s takeover offer. The target price is unchanged at $14, which the analyst said reflects Royal Gold’s current offer price.
“We believe a superior competing offer is unlikely, given the strength and depth of the current deal market and availability of other potential M&A targets in the sector,” Mr. Ma said in a note.
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ATS Corp. (ATS-S) shares dropped this week after the company announced on Monday that its CEO Andrew Hider will be stepping down from the company and board at the end of August to take on a role outside of the automation industry.
ATS said that its chief financial officer Ryan McLeod will serve as interim CEO until a permanent replacement is found.
In the past 52 weeks, the stock has traded between a high of $46.95 and a low of $29.81.
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Upcoming small-cap earnings:
July 11: Velan Inc. (VLN-T), MTY Food Group Inc. (MTY-T)
July 24: Mullen Group Ltd. (MTL-T), Winpak Ltd. (WPK-T), Hammond Power Solutions Inc. (HPS-A-T)
July 28: New Gold Inc. (NGD-T), Tilray Brands Inc. (TLRY-T)
July 29: First National Financial Corp. FN-T, Morguard North American Residential REIT (MRG-UN-T), Trican Well Service Ltd. (TCW-T)
July 30: First Capital REIT (FCR-UN-T), Morguard REIT (MRT-UN-T), Champion Iron Ltd. (CIA-T), Information Services Corp. (ISC-T)
July 31: Aecon Group Inc. (ARE-T), Real Matters Inc. (REAL-T), Spin Master Corp. (TOY-T), Dundee Precious Metals Inc. (DPM-T), Coveo Solutions Inc. (CVO-T), Lightspeed Commerce Inc. (LSPD-T), Canada Goose Holdings Inc. (GOOS-T), Ag Growth International Inc. (AFN-T)
Aug. 1: NFI Group Inc. (NFI-T), Canfor Corp. (CFP-T), Canfor Pulp Products Inc. (CFX-T)
Aug. 4: BTB Real Estate Investment Trust (BTB-UN-T),
Aug. 5: CT REIT (CRT-UN-T), Pet Valu Holdings Ltd. (PET-T)
Aug 6: Killam Apartment REIT (KMP-UN-T), Cargojet Inc. (CJT-T), BSR REIT (HOM-U-T), Curaleaf Holdings Inc.(CURA-T), Pason Systems Inc. (PSI-T), Total Energy Services Inc. (TOT-T), Extendicare Inc. (EXE-T), Centerra Gold Inc. (CG-T), Trulieve Cannabis Corp. (TRUL-CN), Step Energy Services Ltd. (STEP-T)
Aug. 7: Western Forest Products Inc. (WEF-T), Alaris Equity Partners Income Trust (AD-UN-T), Russel Metals Inc. (RUS-T), Artis REIT (AX-UN-T), Black Diamond Group Ltd. (BDI-T), Altus Group Ltd. (AIF-T), Interfor Corp. (IFP-T), Hut 8 Corp. (HUT-T), Flagship Communities Real Estate Investment Trust (MHC-UN-T), TerrAscend Corp. (TSND-T), Slate Grocery REIT (SGR-UN-T)
Aug. 8: Boralex Inc. (BLX-T)
Aug. 11: K92 Mining Inc. (KNT-T), Ballard Power Systems (BLDP-T),
Aug. 12: Westport Fuel Systems Inc. (WPRT-T), Sienna Senior Living Inc. (SIA-T), Superior Plus Corp. (SPB-T)
Aug. 13: H&R REIT (HR-UN-T), Bird Construction Inc. (BDT-T), Galiano Gold Inc. (GAU-T), Minto Apartment REIT (MI-UN-T), Pollard Banknote Ltd. (PBL-T)
Sept. 24: AGF Management Ltd. (AGF-B-T)