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The Canadian market has recently exhibited signs of recovery, supported by easing inflation and positive economic data. With the TSX rebounding by over 5%, attention has turned to small-cap stocks that display strong fundamentals. These stocks are garnering interest due to their robust financial health amid improving market conditions. This article highlights three Canadian small-cap stocks—Leon's Furniture, Silvercorp Metals, and TerraVest Industries—that stand out for their financial performance and resilience.
Leon's Furniture (TSX:LNF)
Leon's Furniture Limited, a well-known name in the Canadian retail sector, operates as a retailer of home furnishings, mattresses, appliances, and electronics. The company boasts a market capitalization of approximately CAD 1.92 billion. In the second quarter of 2024, Leon's reported sales of CAD 617.66 million and a net income of CAD 30.17 million, reflecting an increase from the previous year. The company has strengthened its financial position, evidenced by an improved debt-to-equity ratio of 10.4% over the past five years. Trading at 61.9% below its estimated fair value, Leon's Furniture has also raised its quarterly dividend to CAD 0.20 per share. Additionally, the recent appointment of a new CFO suggests strategic leadership adjustments, reinforcing the company's financial stability.
Silvercorp Metals (TSX:SVM)
Silvercorp Metals Inc., operating in the mining sector, focuses on acquiring, exploring, developing, and mining mineral properties. The company has a market capitalization of approximately CAD 1.12 billion. Silvercorp Metals has demonstrated significant financial growth, with earnings surging by 149% over the past year, far exceeding the industry average of 10%. For the first quarter of 2024, the company reported sales of USD 72.17 million and a net income of USD 21.94 million. Silvercorp Metals is debt-free and has consistently delivered high-quality earnings. In early 2024, the company repurchased 191,770 shares for USD 0.61 million, indicating a proactive approach to managing its financial resources.
TerraVest Industries (TSX:TVK)
TerraVest Industries Inc., a player in the energy services sector, manufactures and sells goods and services across various markets, including energy, agriculture, mining, and transportation in Canada and the United States. The company has a market capitalization of approximately CAD 1.78 billion. TerraVest has reported strong earnings growth, with a 43.6% increase over the past year, outperforming the industry average decline of 4.7%. For the third quarter of 2024, TerraVest Industries reported revenue of CAD 238.13 million, up from CAD 150.36 million a year ago, and a net income of CAD 11.92 million, compared to CAD 7.97 million in the previous year. Although the company has a high net debt-to-equity ratio of 42.3%, its interest payments are well-covered by earnings before interest and taxes (EBIT), with five times coverage.
Leon's Furniture, Silvercorp Metals, and TerraVest Industries represent financially strong small-cap stocks within their respective sectors. These companies have demonstrated robust financial performance, positioning them as noteworthy players in the recovering Canadian market.
