Small Cap Stocks Analysis: Boston Pizza, Danimer Scientific, Gamehost, and Nextleaf Solutions
The TDR Three Key Takeaways regarding Small Cap Stocks and Small Cap Company:
- Small-cap stocks offer unique opportunities with valuations between $250M and $2B
- Boston Pizza offers stable returns with its unique royalty trust model.
- Nextleaf Solutions’ 129% revenue increase and strong profitability in small-cap stocks niche.
“Small Cap Sunday” examines the financial metrics of four small-cap stocks: Boston Pizza (TSX: BPF-UN), Danimer Scientific (NYSE: DNMR), Gamehost (TSX: GH), and Nextleaf Solutions (CSE: OILS), analyzing their market positions, financial health, and future prospects.
Boston Pizza (TSX: BPF-UN), a restaurant chain with 372 locations across North America, operates under a royalty trust model, allowing investors to earn 5.5% off the top-line sales of its franchisees. This structure mitigates operational risks, such as fluctuating food costs and labor expenses, which typically burden traditional restaurant investments. The company reported $101 million in revenue last year, with 2.5% growth over the past twelve months and 14% over three years. Boston Pizza offers a dividend yield of 8.6%, with a growth rate of 9.7% in the past year. The company’s gross margin is 100%, and it has a high credit score of 7. Among small-cap stocks in the restaurant sector, Boston Pizza stands out for its stable returns and strong financial health.
Danimer Scientific (NYSE: DNMR) is an environmental company specializing in biodegradable plastics. Despite its innovative approach and portfolio of 430 patents, the company faces significant financial challenges. It generated $45 million in revenue last year, far short of the projected $455 million for 2024. The company’s gross margin stands at -53.7%, indicating high operational costs. Levered free cash flow was -$67 million last year and -$172 million the previous year. Danimer has a negative credit score of -1.3, reflecting its financial instability. This small-cap stock represents a high-risk, high-reward scenario for investors interested in environmental innovation.
Gamehost (TSX: GH), an Alberta-based casino operator, manages three properties in mid-level cities with limited entertainment options. This strategic positioning enables consistent patronage without the need for extravagant attractions. Gamehost reported $84 million in revenue last year, with a growth rate of 12.7% over the past twelve months and 34% over three years. The company has a gross margin of 49.6% and levered free cash flow of $23.5 million last year and $18.4 million the previous year. It offers a dividend yield of 4.8%, growing at 33% annually, and has a credit score of 5.6. Gamehost is a intriguing small-cap stock in the casino industry, offering strong financial performance and steady dividends.
Nextleaf Solutions (CSE: OILS) focuses on cannabis extraction and consumer packaged goods, including gummies, oils, and pre-rolls. Under CEO Emma Andrews, the company has enhanced its market presence and operational efficiency. Nextleaf reported $10.2 million in revenue last year, with a 129% increase over the past year and a three-year average growth rate of 73%. The company achieved positive levered free cash flow of $228,000 and net income of $600,000 last year. The company’s substantial depreciation indicates strong core profitability. As a small-cap stock in the cannabis sector, Nextleaf Solutions is notable for its impressive growth and profitability.
Investing in small-cap stocks offers a blend of high growth potential and elevated risk. Boston Pizza and Gamehost present stable, income-generating opportunities with strong financials and strategic market positions. Danimer Scientific poses high risks with its innovative yet financially unstable model. Nextleaf Solutions stands out in the cannabis sector with its impressive growth and profitability. Thorough research and due diligence are crucial when considering small-cap stocks. Want to be updated on all things Psychedelic, Cannabis, AI, and Crypto? Subscribe to our Daily Baked in Newsletter!
