5 rising TSXV stocks to buy under $10

Highlights

• One of the companies mentioned finalized a plant that produces 120 tons of silicon material per year, equivalent to supplying silicon for 40,000 EVs.
• In Q2 FY21, the total revenue of one of these companies grew 104 per cent YoY.
• The highest ROE among the below companies was 975.6 per cent.

The Canadian economy experiences varying business cycles, some of which are predictable, whereas others are not. There are some listed companies whose stock prices gain rapidly as compared to their peers. The rapid shift of business cycles also increases the volatility in the stock market.

The S&P/TSX Venture Composite Index returned 3.68 per cent on a YTD basis whereas NEO Battery material Ltd, one of the rising star stocks, returned 811 per cent on a YTD basis. It clearly outperformed the index within this time frame. The highest ROE posted by one of these rising star stocks was 975.6 per cent.

So, let us walk through some of the rising star stocks in Canada.

1. com Inc (TSXV:KSI)

The company develops software-based applications specifically for the life science industry. The application models regulated data and processes for this industry.

Kneat.com Inc held a market cap of C$ 332.92 million on September 1, 2021, while on this day, its outstanding shares were 76.54 million.

When the market closed on August 31, 2021, the stock price of Kneat.com was C$ 4.35 apiece. On this day, it traded close to 118 per cent above its 52-week low price of C$ 2 (December 8, 2020). The stock returned 109 per cent in the last nine months and 71 per cent over the past year.

In the second quarter of the fiscal year 2021, Kneat.com posted total revenue of C$ 3.15 million, which grew by 104 per cent Year-over-Year (YoY). In the same quarter, SaaS revenue of the company was up by 170 per cent YoY.

The company also added new customers and expanded its existing customer base during the quarter. Kneat.com held a price-to-book (P/B) ratio of 9.06 on September 1.

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2. Sigma Lithium Corporation (TSXV:SGMA)

The mining company explores lithium in Brazil with interests in other projects in Santa Clara and Sao Jose, California. The market cap of Sigma Lithium was C$ 856.69 million and it held 87.33 million outstanding shares on September 1, 2021.

The stock price of Sigma Lithium closed at C$ 9.81 on August 31, 2021, and traded close to 379 per cent above its 52-week low price of C$ 2.05 on this day. The stock price rocketed 334 per cent over the past year, and it increased by nearly 48 per cent on a quarter-to-date (QTD) basis.

As per the latest press release, Sigma Lithium conducted a Phase 2 economic analysis of one of its Brazil-based high-grade projects. The company plans to double its production capacity.

Sigma Lithium incurred a net loss and comprehensive loss of C$ 7.4 million in Q1 FY21. The P/B ratio of the company stood at 14.01 per cent on September 1.

Also Read: Rising stars: 5 Canadian stocks to look out for in 2021

3. NEO Battery Materials Ltd. (TSXV:NBM)

This Vancouver-based company caters to battery-based materials and metals. NEO Battery Materials is a C$ 71.93 million market cap mining company that develops silicon anodes and uses graphite in lithium-ion batteries to improve efficiency.

On July 8, 2021, the stock price of NEO reached its 52-week high of C$ 1.31.  The stock price traded 925 per cent above its 52-week low of C$ 0.08 on August 31, and it closed at C$ 0.82 on the same day.

On a YTD basis and over the past year, the stock price ballooned 811 per cent.

The senior management of NEO Battery commented that it finalized the semi-commercial plant to produce 120 tons of silicon material per year. This is equivalent to supplying these materials to 40,000 electric vehicles (EV).

On the valuation front, the company posted a return on equity (ROE) of 975.6 per cent, and the P/B ratio stood at 79.

4. Neo Lithium Corp. (TSXV:NLC)

This mining company develops lithium brine and explores lithium-based properties. A major part of its revenue comes from Canada, and it conducts business in Argentina as well. The market cap of this mining company was C$ 614.84 million (at the time of writing).

Neo Lithium has been recognized by Contemporary Amperex Technology Co Limited (CATL) for its battery standards. Neo Lithium achieved a purity of 99.89 per cent in its battery-grade lithium carbonate.  

The stock price of Neo Lithium skyrocketed by nearly 540 per cent over the past year, and it closed at C$ 4.35 on August 31. It reached its 52-week high price of C$ 4.8 on August 25, 2021.

On the valuation front, the company posted a price-to-earning (P/E) ratio of 46.6, ROE of 14.76 per cent, and return on assets (ROA) of 14.28 per cent.

Also Read: 2 rising TSXV stars under $5 that could interest you in 2021

5. Desert Mountain Energy Corp (TSXV: DME)

Desert Mountain explores and develops helium and some earth gas properties that are rare in nature. The company launched its initial public offering (IPO) on June 27, 2008, and got listed on the Toronto Stock Exchange Venture (TSXV).

The company posted a P/B ratio of 9.41 while holding a market cap of C$ 322.78 million on September 1.

The stock price of Desert Mountain gained 286 per cent from its 52-week low of C$ 1.17 and closed at C$ 4.52 on August 31. The one-year stock return was 267 per cent, whereas, on a YTD basis, the stock increased by 201 per cent.

The management of Desert Mountain commented that the company completed testing of a well and has sent gas samples to the laboratory to be tested. This is expected to enhance and expand the geological formation that produces helium.

Bottom Line:

These rising stocks have the potential to rise even further with higher returns on equity and stock gains both in the short and long term.