To mark the investment year’s halfway point, we are pleased to present the Weekly Market Movers’ top stock picks year to date.
These stocks have managed to outperform the TSX’s approximately 3.25 per cent return by a wide margin thanks to a combination of attractive assets, clear value-added services, and hard results to back up rosy growth expectations.
Their achievements are all the more impressive because of the continued rising-rate environment, with the Bank of Canada’s benchmark rate now at 4.75 per cent to combat persistent inflation of 4.4 per cent as of April 2023.
The inflation figure, well above the central bank’s 2 per cent target, is caused by a tight labour market with unemployment around 5 per cent and household spending up for goods and services in Q1. Businesses aren’t falling behind either, with Statistics Canada reporting Q1 GDP growth of 3.1 per cent YoY, comfortably above the agency’s 2.5 per cent forecast. A preliminary estimate adds further growth of 0.2 per cent in April.
Contrary to the numbers, sentiment is worsening among consumers and businesses, as evidenced by the TSX’s choppy start to the year, and the roughly 18-month lag between interest rate moves and their effects on an economy. This has contributed to steep losses for small and micro-cap stocks (many of which were featured this year on Weekly Market Movers) that continue to develop exciting initiatives at the forefront of Canadian commerce and represent potential value opportunities worth a further look.
Value plays aside, five stocks out of the dozens we’ve featured this year stand out clearly above the rest. From fintech software, to mining, to cutting-edge data transmission technology, each offers ample reasons for portfolio inclusion, including clear catalysts toward profitability and shareholder value at an early stage in their development.
With market caps topping out at a mere C$175 million, the future is certainly bright for our top stock picks of the year (so far), and their strong cases for nudging sidelined investors back into the market regardless of macro conditions:
5. High Tide Resources: 50% return YTD
We start things off with High Tide (CSE:HTRC), which is developing advanced-stage iron ore and battery metal projects in Canada.
The company is earning a 100 per cent interest in the Labrador West iron project adjacent to IOC/Rio Tinto’s 23 mtpy Carol Lake Mine in Labrador City, Labrador. Management filed an NI 43-101 report for the project in April estimating an inferred resource of 654.9 million tonnes at 28.84 per cent FeT.
The company is also earning a 100 per cent interest in the Clearcut Lithium Project and the Lac Pegma Copper-Nickel-Cobalt deposit in Quebec.
Ongoing phase-2 exploration at Clearcut is prospecting and mapping five high-priority areas based on 2022 geochemical, geophysical and LiDAR surveys.
A full prospecting program at High Tide’s pegmatite-rich Big Bang project in Ontario is slated for late June.
You can learn more about High Tide by reading its investor presentation for April 2023, which details, among other things, how the company’s approximately $11 million market cap values it at less than Labrador West’s iron resource.
4. POET Technologies: 50.83% return YTD
Our next company is POET Technologies (TSXV:PTK), a design and development company focused on integrating electronic and photonic devices into a single multi-chip module. In simpler terms, the company’s products make the internet faster by optimizing data transfers for cost and power, opening up numerous revenue streams across the technological spectrum.
The company has been on a tear thanks to securing an initial purchase order for its optical engines, and an advanced purchase order for its POET Starlight packaged light source solution, drawing more and more investors into its transition from technology to product development.
Long-term catalysts include semiconductor market growth, applications in AI and machine learning programs, and how processing speed leverage can determine the difference between industry competitors, whether they be data centers, streaming companies, or telecom providers.
Given the complex nature of POET’s technology, trading volumes remain quite low, which can contribute to price-value dislocation and the chance for an investment at an attractive price.
Learn more through POET Technologies’ investor presentation for March 2023.
3. Surge Battery Metals: 61.54% return YTD
In the middle of the pack, we have Surge Battery Metals (TSXV:NILI), a mineral exploration company focused on nickel-iron alloy in British Columbia and lithium in Nevada to supply the electric vehicle market.
Its flagship Nevada North Lithium exploration project features highly anomalous zones with over 100 soil samples carrying greater than 1,000 ppm lithium.
The project’s main soil lithium anomaly extends 2,300 metres north-south x 500 m wide, with three other significant soil anomalies also outlined on the property. An 8-hole, 776-m scout drilling program confirmed significant lithium at depth highlighted by four zones of more than 1,000 ppm Li averaging 3,943 ppm Li over 120 m.
The company expects to return for follow-up drilling by next month while focusing on its other prospective projects, each of which resides in friendly, world-renown mining jurisdictions.
With nickel and lithium sitting front-and-centre of the EV and green energy movement, and demand expected to balloon through 2030, it’s no wonder that key industry players are showing interest and taking stakes in the company in anticipation of an imminent mineral discovery.
Learn more through Surge Battery Metals’ investor presentation for 2023.
2. Orford Mining: 71.43% return YTD
In our runner-up spot is Orford Mining (TSXV:ORM), a gold and critical mineral explorer active across three high-potential projects in Quebec.
Its advanced-stage Joutel gold exploration properties in the Abitibi region feature multiple defined gold zones, which the company expanded just last month.
Its Qiqavik property hosts gold discoveries that have grown in number every summer field season since Orford took over in 2016. The property also holds recently identified lithium potential.
Its advanced-stage West Raglan Ni-Cu-PGE exploration project (51 per cent Wyloo/49 per cent Orford) boasts historical intersections up to 3.21 per cent Ni, 1.32 per cent Cu, 0.65 g/t Pt and 2.43 g/t Pd over 28.28 m. Exploration work to date has identified outcropping sulphide mineralization over more than 35 kilometres of largely untested strike length.
Finally, Orford is preparing an inaugural exploration program on its Nunavik Lithium properties, where the company has identified a new prospective lithium pegmatite district marked by geochemical results for lithium pegmatite pathfinders in the 90th percentile or better for the province.
Backed by lead shareholders Alamos Gold (26.18 per cent) and Karora Resources (6.6 per cent), the company’s odds of economical extraction have continued to improve since inception. A C$6.2 million financing will serve to continue that trend by funding summer exploration at Qiqavik, Joutel and the Nunavik Lithium properties.
Continue your due diligence with Orford Mining’s investor presentation for May 2023.
1. Hank Payments: 125% return YTD
The clear winner among our top stock picks through midyear is Hank Payments (TSXV:HANK), whose fintech software-as-a-service (SaaS) and banking-as-a-service (BaaS) platforms manage cash flow and budgets on an automated basis.
Hank serves more than 43,000 active users and has processed more than US$1 billion in payments since 2018 with an eye on minimizing client debt and optimizing return on investment.
The company’s Q3 results were highlighted by strong gross margins of 89 per cent, monthly recurring revenue per user up 14 per cent YoY from C$5.22 to C$5.93, and its lowest quarterly adjusted loss at C$318,779.
Management expects to see revenue from its new education platform by the end of Q2, and from its C$5 million Canadian license deal in Q4, as it seeks to bring more meaningful improvements to financial literacy across North America.
With an addressable U.S. market of approximately US$5.5 billion, and an active presence across 48 states through its small and medium enterprise channel, the company is trending toward becoming cash flow positive in 2023.
Delve deeper into Hank Payments through its investor presentation for May 2023.
All YTD returns data is as of June 8, 2023.
This is sponsored content issued on behalf of High Tide Resources, POET Technologies, Surge Battery Metals, Orford Mining and Hank Payments, please see full disclaimer here.
