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Small-cap stocks are trading relatively in-line with the broader index.

Year-to-date, the price return for the S&P/TSX Composite Index is 1.2 per cent compared to a 0.3-per-cent loss for the S&P/TSX SmallCap Index. However, there is one notable difference. There is greater breadth in the TSX SmallCap Index with 19 per cent of stocks (46 out of 244 stocks) realizing double-digit price returns in 2024, compared to less than 12 per cent of stocks (26 out of 225 stocks) with double-digit price returns in the S&P/TSX Composite Index.

Among the performance leaders is a small-cap tech stock with a price return of nearly 24 per cent in just seven weeks - Sylogist Ltd. (SYZ-T). The average target price has increased to $12.33 from $10.25 at the start of the year after two analysts initiated coverage on the company with target prices of $12 (Paradigm Capital’s Daniel Rosenberg) and $14 (Stifel’s Suthan Sukumar). The stock has a unanimous buy-equivalent recommendation from six analysts with an additional 34-per-cent gain in the share price anticipated by the Street.

Another performance leader is Heroux-Devtek Inc. (HRX-T) with a price return of 20 per cent so far this year. Before the market opened on Feb. 7, the company reported better-than-expected sales and earnings that lifted the share price 10 per cent that day. Sales came in at $163.5-million, surpassing the consensus estimate of $148.7-million. Earnings per share came in at 27 cents, topping the Street’s expectations of 16 cents. Given the strong financial results, four analysts raised their target prices. The current target price currently sits at $22.80, up from $19.10 at the start of the year, suggesting that there is 25-per-cent upside in the share price.

This report includes a link to a list of analysts’ target prices, recommendations, forecast returns and yields for all securities in the S&P/TSX SmallCap Index grouped by sector and ranked according to their expected price returns (excluding dividend and distribution income). The posted target price for each security is an average of all available target prices from analysts. A target price typically reflects an expected share or unit price 12 months from now based on an analyst’s financial modelling, such as a discounted cash flow or sum-of-the-parts model. For the yield provided, Bloomberg calculates this figure by annualizing the most recent announced dividend or distribution value.

It’s important to note that high target prices, which imply stellar returns that seem unbelievable may be just that - unrealistic. At times, when a stock price falls analysts may maintain their bullish expectations, inflating the forecast return. In addition, an outlier (extreme target price) can skew the average target price, to the upside or downside, particularly when the number of analysts covering a stock is low. Don’t let a huge projected gain lure you into a position – it is critical to look at the company and industry fundamentals.

Click here to download an Excel version of the report.

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