A 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 35 per cent over the past 52 weeks. It hit a record 1,496.55 on June 2. The Russell 2000 in the U.S. is up about 16 per cent over the past 52 weeks and reached a high of 3,069.71 on Aug. 14.
Small-cap summary:
Thinkific Labs Inc. (THNC-T) shares soared 72 per cent on Thursday after the company announced a reorganization, which includes cutting nearly a third of its staff, which it says will save US$19-milllion annually. The company also raised its third-quarter guidance.
After markets closed on Wednesday, the Vancouver-based education technology company said the “strategic realignment of its workforce and operating model” will help drive growth in its Thinkific Plus platform, “while improving operational discipline and maximizing profitability and free cash flow.”
It said the reorganization, which included eliminating positions affecting 96 employees, will allow it to invest more in products serving its highest-value customers, continue growing its upmarket customer base and business, and focus its research and development efforts.
Thinkific said it expects to incur about US$5-million in related restructuring charges in the third quarter. It said the changes are expected to yield “a material improvement” in its free cash flow margin, which is targeted at 25 per cent or more of revenue in fiscal 2027.
The company reaffirmed its previously disclosed revenue outlook of US$18.6-million to US$18.9-million and said it’s tracking “to the high end of the guided range.”
It’s also raising its previously disclosed outlook for adjusted EBITDA to a range of 7 to 10 per cent of revenue from a range of 2 to 5 per cent of revenue. It said the calculation excludes related restructuring costs incurred with the reorganization.
BMO analyst Thanos Moschopoulos said in a note that he expected the stock “to react very favourably” to the news given the EBITDA and cash flow implications.
“However, given that THNC’s revenue growth had already been subdued prior this announcement, we’re apprehensive that the magnitude of the restructuring could translate into a y/y revenue decline in FY2027,” he wrote.
CIBC analyst Todd Coupland maintained his “neutral” (hold) on the stock: “The AI pivot is credible, but the growth turn is unproven,” he wrote.
He added: “Re-rating requires: 1) accelerating ARR [annual recurring revenue] growth within Plus, 2) measurable AI adoption and retention gains, and 3) proof that the revamped GTM converts pipeline into durable net-new ARR.”
He increased his target to $1.50 from $1.20.
ATB Cormark analyst Gavin Fairweather described the news as “transformative for the stock given the scale of the expected cash flow relative to the prevailing valuation.”
He added: “Thinkific announced a cost structure reset that refocuses the organization toward its growing Plus business while turning its Self-Serve business into a meaningful cash cow. The size of the cost reductions will drive a step change in EBITDA beginning in Q4, with a 25-per-cent FCF margin target for C27.”
In reaction to the news, Mr. Fairweather upgraded the Vancouver-based software company to “outperform” from “sector perform” previously, emphasizing its valuation was “at a modest premium to cash prior to the news.”
Mr. Fairweather increased his target by $1 to $3.25. The average is $1.50.
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Slate Grocery REIT (SGR-UN-T) units sank 25 per cent on Thursday after the company suspended its monthly distribution. At least one analyst suggested that the move was tied to the rising yield curve.
After markets closed on Wednesday, the REIT said the move was made “to enhance the REIT’s financial and strategic flexibility,” pending the outcome of the special committee’s previously announced review and evaluation of strategic alternatives.
“As previously announced, the Special Committee has a broad mandate to consider and evaluate a range of strategic alternatives available to the REIT,” it stated in a release. “The strategic review remains active and ongoing, and the Special Committee continues to evaluate a broad range of alternatives available to the REIT.”
The company also said the decision “was not taken in response to a change in the underlying fundamentals or long-term outlook of the REIT’s portfolio. Management’s views regarding the strong underlying fundamentals and long-term prospects of the portfolio remain unchanged.”
TD analyst Sam Damiani described the announcement as “an unexpected turn,” which he wrote in a note is “likely a response to the recent increase in the yield curve, which has a disproportionate impact on SGR given its relatively short ~2 year WADM [weighted average debt maturity] and 66 per cent of debt maturing through 2028.”
He said the units had been yielding 8 per cent on Wednesday’s closing price based on the prior 86-cent annualized distribution.
ATB Cormark analyst Sairam Srinivas described it as “a very negative development,” in a note.
He downgraded units of the Toronto-based REIT, which owns and operates U.S.-base grocery-anchored real estate, to “underperform” from “sector perform” previously.
“Given the timing of the news release, lack of commentary around the process, and the fact that the strategic review was initiated by a proposal from the third party asset manager, in combination with SGR’s investment proposition as an income play, which is now fundamentally changed with the distribution suspension, we see this update as significant and negative,” Mr. Srinivas wrote.
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Vecima Networks Inc. (VCM-T) reported fourth-quarter results that beat expectations.
Before markets opened on Thursday, the Victoria-based broadband hardware and software company reported revenue of $91-million for the quarter ended June 30, up from $66.7-million a year earlier. The result beat expectations of $79.1-million, according to S&P Capital IQ estimates.
Adjusted EBITDA more than tripled to a record $18.9-million, from $6.2-million last year.
Net income of $5.4-million or 22 cents per share compared to a loss of $13.3-million or 55 cents last year. The expectation was for earnings of 21 cents.
“We view the results as positive for the shares given the strong Q4 results and increases to the revenue growth in the coming quarters,” Acumen Capital analyst Jim Byrne wrote in a note before market open.
He said the revenue beat his estimate of $79.1-million and adjusted EBITDA was above his estimate of $13.9-million.
“The company continues to increase customer engagement,” he wrote and added that the company won several new customers in the quarter and signed several agreements, “one of which was with a large Tier 1 Canadian operator and advanced its trial activities with another Tier 1 customer.”
He also noted that the company expects achieve revenue growth rates of 30 to 35 per cent and adjusted EBITDA margins of about 20 per cent in fiscal 2027.
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BlackBerry Ltd. (BB-T) reported stronger-than-expected second-quarter results Thursday and increased its financial forecasts for the second time this fiscal year.
The company, based in Waterloo, Ont., said it generated US$163-million in revenue in the quarter ended Aug. 31, 26-per-cent higher than the same period a year earlier. That was driven by a 27-per-cent increase in its sales from its vehicle software unit, QNX. Analysts had expected revenues of just US$145.3-million, according to consensus estimates from S&P Global Market Intelligence. The company in June had forecast revenue for the quarter would be no higher than US$148-million.
Chief financial officer Tim Foote attributed the higher revenue to better-than-expected royalties as vehicles with QNX software rolled off the line. “We’ve been winning a lot of new programs” with automakers to embed the software within their vehicles, he said in an interview. “This is about converting that backlog” into revenues and profits.
The company’s slower-growing secure communications business generated revenue of US$60.9-million, in line with expectations, while its licensing business – involving the collection of payments from other companies for use of its intellectual property – delivered a better-than-expected windfall of US$22.1-million in high-margin revenue.
Read the full story from the Globe’s Sean Silcoff here
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Cineplex Inc. (CGX-T) shares fell on Wednesday after it announced a new CEO and a review of strategic alternatives including a potential sale of the company.
Before markets opened on Wednesday, the Toronto-based theatre and entertainment company said Bill Walker will replace Ellis Jacob, who announced last year that he planned to retire. Mr. Jacob will serve as a special advisor to the board until the end of the year. Mr. Walker takes over the top job effective today.
Mr. Walker is the former CEO of Landmark Cinemas, Canada’s second-largest theatre exhibitor, operating as part of Kinepolis Group NV, a publicly traded cinema company based in Belgium.
Regarding the strategic review, the board said it will consider a range of alternatives, “including, but not limited to, a potential sale.”
Cineplex said it has made no decisions on any particular strategic alternative, and has not set a timetable for completing the review.
“We remain cautious on the prospect of a potential takeout, (especially at a substantial premium) for four reasons,” Canaccord analyst Aravinda Galappatthige wrote in a note. “First, Cineplex has effectively been for sale since the Cineworld deal fell through, and neither strategic nor financial buyers have shown notable interest, to our knowledge. Second, FCF [free cash flow] has been uneven and low since the pandemic. It peaked at $0.71 per share in F2023. We expect 2026 to be similar or somewhat better, but we wonder if a level above $1/sh can be sustained. Third, a foreign buyer would likely find few cost savings. The business does not lend itself to large synergies, and Cineplex has already sold much of its non-core assets. Fourth, valuation looks unattractive on an enterprise value basis because of the debt load, including the convertible debentures. The FCF yield on EV is only 4.7 per cent, even on our F2027 estimates.”
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AGF Management Ltd. (AGF-B-T) shares fell on Wednesday after the investment management company reported third-quarter results that missed expectations.
Before markets opened on Wednesday, the Toronto-based company reported adjusted EBITDA of $48.8-million for the quarter ended Aug. 31 compared to $46.2-million last year. The result was below expectations of $54.4-million, according to S&P Capital IQ estimates.
Adjusted net income attributable to equity owners was $32-million or 49 cents per share versus $31.2-million or 46 cents last year. The expectation was for EPS of 58 cents.
Total adjusted net revenue of $112.5-million was up from $107.5-million a year earlier.
“AGF reported an earnings miss on lower AGF Capital Partners revenue (management fees were in line but offset somewhat by a $3.3[million] FV [fair value] loss from AGF Capital Partners). Expenses were in line and FCF [free cash flow] beat,” TD analyst Graham Ryding said in a note. “Flows were generally in line with expectations; muted for mutual funds but positive for Canadian ETFs / SMAs [separately managed accounts].”
Read more in analyst commentary in Thursday’s analyst upgrades and downgrades
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Maple Leaf Foods Inc. (MFI-T) announced plans to consolidate its U.S. plant protein production into a single “centre of excellence” at its Indianapolis, Indiana facility. It will wind down production at its plants in Seattle, Washington and Turners Falls, Mass.
After markets closed on Tuesday, the company said the transition is expected to happen in phases over approximately 12 to 18 months, with targeted completion in the fourth quarter of next year.
It said the expected benefits, costs and capital requirements of the consolidation are included in its previously disclosed 2030 financial outlook.
“This decision does not change our commitment to the plant protein category,” CEO Curtis Frank stated. “In fact, we believe it strengthens the foundation of the business.
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5N Plus Inc. (VNP-T) announced plans to expand its St. George, Utah facility by approximately 50 per cent.
Before markets opened on Tuesday, the Montreal-based specialty semiconductors and performance materials company said the expansion project aims to provide a “capital-efficient and scalable platform” to grow its advanced materials capabilities for defence, space solar, medical imaging and industrial sensing applications.
“It will also contribute to strengthening the resilience of strategic North American critical mineral transformation supply chains,” the company stated.
It said the expansion project follows two recently announced U.S. government awards supporting capabilities being developed in St. George over the coming years, as well as partnerships with U.S. defence customers. It said the expansion project will be funded through existing capital expenditure plans and with customer support.
National Bank Financial analyst Baltej Sidhu said he viewed the expansion “positively” in a note.
“The investment reinforces VNP’s scarcity value and increasingly strategic position within U.S. defence and critical semiconductor supply chains,” he said. “St. George integrates upstream critical mineral recovery, refining and purification with downstream production of semiconductor crystals, wafers, substrates and selected components. To our understanding, it is also the only U.S. facility capable of producing gallium arsenide (GaAs) crystals.”
Added Mr. Sidhu: “Recent government awards supporting both the upstream and downstream value chain could, in our view, generate US$20–25mln of run-rate EBITDA, with further upside as additional products and customers are qualified. The newly announced expansion will not contribute to 2026 earnings, with construction expected to be completed in H2/27, but establishes a capital-efficient, customer-supported platform to facilitate growth. Nearer term, we see upside to 2026E adj. EBITDA guidance and a further potential AZUR expansion as positive catalysts.”
Canaccord analyst Amr Ezzat reiterated his “buy” and $48 target after the news.
“The expansion reinforces a pattern that has become increasingly visible at St. George. 5N is leveraging an existing technical base to add scarce semiconductor capabilities alongside committed customer demand, while government support lowers the capital required to establish strategically important domestic supply,” he wrote. “Germanium capacity is scaling several-fold, GaAs capabilities are being added, and the same site already serves a broader portfolio of imaging, sensing and space applications. This is consistent with the capital-allocation model we increasingly associate with 5N: invest behind demand, preserve scarcity and move progressively farther downstream into higher-value, harder-toreplace products. Since our September 3 conviction note, the strategic case has continued to strengthen.”
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Hammond Power Solutions Inc. (HPS-A-T) shares rose earlier this week after the company announced it has signed a long-term lease for a new manufacturing facility in Fort Worth, Texas.
“The facility will expand HPS’s ability to serve U.S.-based customers requiring large standard and custom-engineered transformers. The Fort Worth facility is strategically located to improve proximity to key customers, shorten delivery distances for certain products and enhance HPS’s ability to serve core end markets,” the company stated in a release before markets opened on Tuesday.
It said production activities at the facility are expected to commence in stages beginning in the fourth quarter of 2027. Once the initial production phase begins, the facility is expected to add approximately $250-million of manufacturing capacity, based on anticipated demand and normal course operating assumptions, the company stated. It expects to invest about $50-million to equip and commission the initial production phase, which it anticipates funding through its existing cash and credit facilities.
The company said the site could support total annual manufacturing capacity of approximately $400-million.
In a note, National Bank Financial analyst Baltej Sidhu said the expansion is a “clear positive, addressing its emerging capacity constraint while positioning the company to better serve U.S. customers and gain market share.”
He added: “The investment reflects a proactive but disciplined, quotation-led approach to capital allocation.”
He maintained his “outperform” rating and $355 target.
Canaccord analyst Matthew Less maintained his “buy” and $378 target after the news.
“In our view, this is the logical next step for Hammond as it scales supply to meet the burgeoning demand for electrical equipment, particularly from data center customers,” he wrote. “We note that the economics of HPS’ capacity buildout are particularly good with the $50M investment generating ~ $35-40M in annual EBITDA. Logistically, we view the Fort Worth location choice as synergistic to existing operations in Canada and Mexico.”
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DRI Healthcare Trust (DHT-UN-T) announced agreements to acquire certain royalty participation rights in U.S. net sales of Tavapadon, an investigational Parkinson’s disease drug candidate, from funds managed by Bain Capital and NovaQuest Capital Management.
The company said the transaction is expected to close after the U.S. Food and Drug Administration (FDA) approves tavapadon and other customary closing conditions are met.
Under the purchase agreements, DRI will pay an aggregate purchase price of US$316-million at closing. Following closing, DRI said it will be entitled to receive tiered royalty payments on annual U.S. net sales of tavapadon, at combined tiered, mid-single-digit to low-double-digit royalty rates. DRI said it will also be entitled to receive certain sales milestone payments upon first reaching certain cumulative U.S. net sales thresholds and four annual fixed payments of US$23.4-million on the first four anniversaries of FDA approval of Tavapadon. Aggregate receipts are subject to a contractual hard cap of US$437.5-million.
“This transaction will add a differentiated in-market asset to our portfolio with a combination of fixed payments, commercial milestones and tiered royalties,” said DRI CEO Ali Hedayat. “The acquisition will provide meaningful value to unitholders both through its standalone returns and by allowing us to optimize our balance sheet capacity. We believe the transaction allows us to achieve our aspirational 2030 Adjusted EBITDA goals in the absence of any further acquisitions over that horizon while still leaving us with ample capacity to grow beyond those levels.”
CIBC analyst Erin Kyle described the news as DRI’s largest royalty acquisition to date.
“Tavapadon is an oral, once-daily therapy for Parkinson’s disease expected to receive FDA approval in the coming weeks (Q3/26),” Ms. Kyle wrote. “While announced in advance of approval, the transaction only closes and funds upon FDA approval, so DRI takes on no pre-approval risk. Given the expected timing of approval, we view this as closer to a commercialized asset than a Phase III transaction, with a correspondingly lower risk profile. Using current consensus for Tavapadon sales, the fixed milestone payments, and estimating sales-based milestones comparable in quantum to the fixed milestones, we calculate a 10-per-cent IRR. Excluding sales-based milestones, we estimate a high single-digit IRR [internal rate of return].”
Added Ms. Kyle: “We see upside to our return profile and NAV estimate depending on the pace of commercialization, which may exceed consensus estimates, and on the timing of cumulative sales milestone payments.”
She increased her target to $21.50 from $21 and maintained an “outperformer” rating.
Canaccord analyst Tania Armstrong-Whitworth increased her target to $25 from $24 and maintained her “buy” rating.
National Bank Financial analyst Nathan Po increased his target to $25.50 from $23.50.
“We reiterate our outperform rating as the existing portfolio alone boasts a mid-teen FCF [free cash flow] yield, marking a compelling entry point for a company with a credible path to exceed its low-teen EBITDA CAGR [compound annual growth rate] guidance with new deployments,” said Mr. Po.
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Artemis Gold Inc. (ARTG-X) announced on Monday that it plans to buy Vista Gold Corp. (VGZ-T) in an all-stock deal valued at US$427 million.
Under the deal terms, Vista Gold shareholders will receive 0.0966 common shares of Artemis Gold for each Vista Gold common share. The exchange ratio implies consideration of US$2.83 per Vista Gold common share. The price represents a premium of 29 per cent based on the 20-day volume-weighted average prices of Artemis Gold on the TSX Venture Exchange and Vista Gold on the NYSE American as at Sept. 18. The consideration is payable in Artemis Gold common shares, the company stated, adding that no cash consideration is payable, and no new debt is being incurred.
Upon completion of the transaction, Artemis Gold and Vista Gold shareholders will own approximately 95 per cent and 5 per cent of the pro forma company, respectively.
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Aecon Group Inc. (ARE-T) shares rose early this week after it announced that its joint venture with AtkinsRéalis Group Inc. (ATRL-T) and consortium with Siemens Energy have been awarded contracts by Ontario Power Generation for the Pickering Nuclear Generating Station Refurbishment Project with an aggregate value of $3-billion.
The company said it builds on the completion of previously awarded contracts for early work ahead of the project. Aecon said its $1.75-billion share of the contracts will be added to its construction segment backlog in the third quarter of 2026.
Stifel analyst Ian Gillies described the news as “positive” in a note.
He said the contract represents 10.3 per cent of Aecon’s 2Q26 backlog, “so it is a substantial win.”
Added Mr. Gillies: “We believe additional awards for Pickering refurbishment will occur in late 2027 or early 2028. These awards help support a view that consensus and Stifel 2027 revenue growth [estimates] for Aecon is too low at 7 per cent. In a 2027 scenario with 17-per-cent revenue growth (and no change to gross margin assumptions), Aecon’s valuation compresses to 16.9x P/E from 22.7x, which makes it an attractive stock at current prices.”
Mr. Gillies said he views Aecon as “one of the key beneficiaries of the Canadian resilience thematic.”
Canaccord analyst Yuri Lynk reiterated his “buy” rating and $62 target price.
“Aecon trades at a significant discount to peers despite roughly half of its business stemming from the high-value utilities and nuclear businesses, where visibility, barriers to entry, demand, and relative valuation are very strong,” he wrote. “With all legacy LSTK [lump sum turnkey] projects having reached substantial completion, we expect the predictability and FCF [free cash flow] growth in Aecon’s results witnessed YTD to become the normal course. We believe this should lead to a continued re-rating in valuation.”
Upcoming small-cap earnings:
Sept. 24: Vecima Networks Inc. (VCM-T), BlackBerry Ltd. (BB-T)
Sept. 28: Sangoma Technologies Corp. (STC-T), Cogeco Communications Inc. (CCA-T)
Oct. 7: Velan Inc. (VLN-T)
Oct. 22: Mullen Group Ltd. (MTL-T)
Oct. 29: Aecon Group Inc. (ARE-T)
- with files from Dave Leeder