Small caps are core to Canada’s stock market ecosystem.
Perhaps its because we have easy methods to go public with the CSE, CPC’s on the TSX Venture which can sometimes bypass traditional venture funding before going public, or because of our history with mining and energy and the public vehicles that have been needed for exploration style ventures (unpredictable cash flow, risky ventures). Either way we have a strong selection of small cap companies in Canada.
The reason we like small caps, is that the potential opportunity is just so damn high! For instance – here are a few the TSX Venture stocks >30% returns in the last 1 year.
And of course, there is the other side of this equasion:
In this guide, I will walk you through:
- Where to find Canadian small cap stocks, including profiles and listings
- How to find Canadian small caps to buy
- Alternative options for small cap exposure such as small cap ETFs
Where to find Canadian small caps
The actual definition of ‘small cap’ varies but is typically between CAD $100 Million to $1 Billion in market cap. Anything smaller than that is reffered to as a micro cap.
In Canada, larger companies typically trade on the Toronto Stock Exchange whereas small caps are usually on:
Below, we have profiles and data for all the Canadian small cap companies on the TSX Venture exchange which you can explore. If you are looking for specific sectors like small cap tech stocks or small cap mining then you can use our industry filter to refine your list.
[tsx_venture_table]
The requirements to list on the TSXV are:
| Requirement Category | Tier 1 (Larger) | Tier 2 (Smaller) |
|---|---|---|
| Net Tangible Assets | ≥ CAD $5 million | ≥ CAD $750,000 |
| Working Capital | ≥ CAD $200,000 | ≥ CAD $100,000 |
| Public Float | 1 million shares | 500,000 shares |
| Shareholders | ≥ 200 | ≥ 200 |
| Market Value of Public Float | ≥ CAD $1 million | ≥ CAD $500,000 |
| Operational Track Record | More flexibility | More lenient |
And for the CSE:
| Requirement Category | Threshold |
|---|---|
| Working Capital | ≥ CAD $200,000 |
| Minimum Price | IPO or listing price of at least CAD $0.10 |
| Public Float | ≥ 500,000 shares |
| Shareholders | ≥ 150 public shareholders each holding a board lot |
| Corporate Governance | Comply with CSE listing policies |
| Audited Financials | Last 3 years or since inception |
How to find Canadian small cap stocks to buy
Like any investment, small caps require research and diligence.
You can always start with this screener, which shows the Canadian small cap performance across the TSXV, CSE and NEO by increasing volume. You can use the filter on the top right to select TSXV and CSE under ‘exchange’ to filter further for small caps.
The idea here is that the small caps with increasing volume are likely starting to get more attention based on external factors – likely related to their product and services, news announcements or earnings.
Finding small caps to buy or sell requires a bit more research than normal because:
- They typically have less news flow
- The company profile is relatively limited
- Financially, they may not be as robust or even have tangible revenue for typical valuation
- Their stock prices can move erratically based on thin liquidity
Here is a list of a few Canadian small caps we have done some research on.
Alternative options for getting small cap exposure
Picking and choosing small caps can be a full time job, so an alternative approach if you are looking for exposure instead of your own stock selection is small cap ETFs of funds.
The problem is that because many of these companies don’t have a high market cap, it can be a lack of incentive for ETF providers who charge lower fees – typically based on AUM. The only real ETF to get Canadian small cap exposure is XCS by iShares which trades on the TSX and has delivered great performance over the long run.
This list of small cap ETFs also covers small caps across the US and globally.
Apart from ETFs there are also a few mutual funds that offer exposure, but note that the MERs on small cap funds are usually quite high:
| Fund Name | MER | Description |
|---|---|---|
| IA Clarington Canadian Small Cap Fund – Series F | 1.35% | Actively managed fund investing in a broad range of Canadian small-cap companies across sectors. Focused on long-term capital growth. |
| TD Canadian Small-Cap Equity Fund – F-Series | 0.99% | TD’s actively managed small-cap strategy with a tilt toward energy and materials stocks. Targets Canadian companies with growth potential. |
| RBC Canadian Small & Mid-Cap Resources Fund – Series A | 2.04% | Resource-focused fund specializing in small- and mid-cap Canadian companies in the energy and materials sectors. Higher risk due to commodity exposure. |
Bottom line – investing in Canadian small caps is fun, exciting and has the potential for some incredible returns, if you are willing to do the work. Typically smaller companies have less information and transparency, but are doing amazing things.
If you do your research you may find some gold gems, and as an alternative a Canadian small cap ETF or fund could be a good simple choice.