2 Canadian Small Caps to Keep Your Eye on

Man holding magnifying glass over a document

Small-cap investing can be tricky, with greater volatility (on average) than most blue-chip stocks that most Canadians flock to. Though small-cap stocks may seem riskier, they can be sources of greater returns over the long haul, especially for the lesser-known small caps that few pay attention to. Indeed, it’s much easier to grow as a $ 500 million company than as a $ 500 billion company!

Further, small- and mid-cap stocks tend to trade at a greater discrepancy to its intrinsic value. In essence, Mr. Market isn’t as efficient in pricing smaller-cap stocks at their true worth. This opens up a window of opportunity for venturesome investors who seek to get a bit more bang for their investment buck.

With market volatility returning to Wall Street just in time for the spring, investors may wish to give the neglected small caps a second look while they experience considerable volatility. At the end of the day, small-cap stocks can help give your portfolio a bit of a jolt. But do be mindful of the price you’ll pay and do know that mid-cap stocks can trade at multiples below their intrinsic value range for quite some time. Indeed, investors will need to be incredibly patient with the neglected small caps.

Without further ado, consider the following two Canadian small caps that I’d look to watch going into March 2023. The following smaller-cap stocks are among my favourite names with market caps south of $ 2.5 billion.

Park Lawn

Park Lawn (TSX:PLC) is a deathcare company that’s grown impressively over the years, thanks in part to smart merger and acquisition moves. Over the past year, shares have sagged considerably, now down around 23% over the past year alone. Shares are off just north of 34% from their all-time highs.

Undoubtedly, recessions can weigh heavily on before-need demand. Though Park Lawn is feeling the macro headwinds, it isn’t the only one in the space that’s felt the pressure. Amid the past year of selling pressure, the firm has been making good use of its balance sheet, acquiring firms like Jacoby and Muehlebach, enhancing the firm’s growing portfolio of deathcare assets.

It’s unclear when industry pressures will fade. Regardless, the stock seems undervalued at 26.8 times trailing price to earnings (P/E). Death care may not be an exciting place to invest, but as a provider of necessary services, Park Lawn is a name that will find its footing again as the environment normalizes.


Cargojet (TSX:CJT) is a mid-cap stock that used to be loved by momentum investors. The cargo airline used to be a compelling way to play the rise in e-commerce. Of late, though, digital orders have begun to feel pressure. As a recession weighs, the demand for overnight shipping could continue to take a hit. Regardless, Cargojet remains a top Canadian way to play the e-commerce trend.

The stock has fallen 48% from its peak. At just 7.7 times trailing P/E, CJT stock is close to the cheapest it’s been in many years. With a capable management team and strong longer-term secular tailwinds likely to exist once macro headwinds fade, Cargojet remains a top mid-cap stock to watch.

The post 2 Canadian Small Caps to Keep Your Eye on appeared first on The Motley Fool Canada.

Should You Invest $ 1,000 In Cargojet?

When our analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for nearly a decade, Motley Fool Stock Advisor Canada, is beating the TSX by 22 percentage points.*

They just revealed what they believe are the 5 best stocks for investors to buy right now… and Cargojet made the list — but there are 4 other stocks you may be overlooking.

See the 5 Stocks
* Returns as of 2/17/23

More reading

  • Got $ 3,000? 3 Growth Stocks to Double Up on Right Now
  • Plan to Retire Rich? 3 TSX Stocks for Retirement to Add to Your Portfolio Now
  • 3 Undervalued TSX Stocks That Should Be on Your Radar
  • $ 10,000 Invested in These Growth Stocks Could Make You a Fortune Over the Next 10 Years
  • 2 TSX Stocks I’ll Be Buying Hand Over Fist in February 2023

Fool contributor Joey Frenette has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Cargojet. The Motley Fool has a disclosure policy.

2 Canadian Small Caps to Keep Your Eye onstock