4 TSX Small Caps with Lots of Cash, Free Cash Flow

BlackRock’s Chief Investment Strategist Kurt Reiman thinks Canadian companies might look to acquisitions to drive growth

SmallCapPower | October 5, 2016: In a rather stagnant economy, organic growth is becoming harder to obtain for many companies. In an article for the Financial Post, Kurt Reimen stated that companies may worry about being left behind when the economic signs favor mergers as another company may beat them to it. He points out that although the M&A is concentrated in three sectors: energy, resources and real estate, it might not be limited to the public market. When companies have a large cash balance and are generating large amounts of free cash flow, they may be looking for a new growth strategy. As the stock price of a company that is being acquired generally goes up upon announcement, look to potential penny stocks that could be acquisition targets of the companies on our list today.

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SciVacBRP Inc. (TSE:DOO) – $25.75
Recreational Products

BRP Inc. is engaged in the design, development, manufacturing, distribution and marketing of power sports vehicles and propulsion systems. The Company manufactures and sells Year-Round Products consisting of all-terrain vehicles (ATVs), side-by-side vehicles (SSVs) and roadsters; Seasonal Products consisting of snowmobiles and personal watercrafts (PWCs), and Propulsion Products consisting of engines for outboard and jet boats, karts, motorcycles and recreational aircraft. The Company’s diversified portfolio of brands and products includes Can-Am ATVs, SSVs and roadsters, Ski-Doo and Lynx snowmobiles, Sea-Doo PWCs, and propulsion systems consisting of Evinrude outboard boat engines and Rotax engines for jet boats, karts, motorcycles and recreational aircraft.

  • Market Cap: $850.65 (mm)
  • Revenue LTM: $3,905.00 (mm)
  • Cash on Hand: $235.00 (mm)
  • Free Cash Flow: $149.50 (mm)

SciVacCenterra Gold Inc. (TSE:CG) – $7.15

Centerra Gold Inc. is a Canada-based gold mining company focused on operating, developing, exploring and acquiring gold properties in Asia, North America and other markets across the world. The Company’s exploration segment includes the operations of Lagares Project, in which the activities are related to its subsidiary, Centerra Gold (KB) Inc. Its Kyrgyz segment includes Kumtor Gold Co. (KGC) (Kyrgyz Republic), which operates Kumtor Mine. Its Mongolian segment includes Centerra Gold Mongolia LLC (CGM) (Mongolia), which operates ATO Project and Gatsuurt Project, and Boroo Gold LLC (BGC) (Mongolia), which operates Boroo Mine. Its Turkish segment includes Centerra Luxembourg Holdings S.ar.L (Luxembourg), Centerra Exploration B.V. (CEBV) (The Netherlands), and Oksut Madencilik Sanayi Ve Tkaret A.S. (Turkey), which operates Oksut Project. Its Canadian segment includes Hearts Peak Project and Greenstone Gold Mines (Canada).

  • Market Cap: $1,732.29 (mm)
  • Revenue LTM: $664.08 (mm)
  • Cash on Hand: $169.64 (mm)
  • Free Cash Flow: $123.02 (mm)

SciVacCelestica Inc. (TSE:CLS) – $14.17

Celestica Inc. is a provider of supply chain solutions in the communications, consumer, diversified, servers and storage end markets. The Company operates in electronics manufacturing services business segment. It offers a range of services to its customers, including design and development, engineering services, supply chain management, new product introduction, component sourcing, electronics manufacturing, assembly and test, complex mechanical assembly, systems integration, precision machining, order fulfillment, logistics and after-market repair and return services.

  • Market Cap: $1,725.66 (mm)
  • Revenue LTM: $7,651.01 (mm)
  • Cash on Hand: $658.87 (mm)
  • Free Cash Flow: $188.11 (mm)

SciVacSemafo Inc. (TSE:SMF) – $5.37

SEMAFO Inc. is a Canada-based mining company. Its segments include Mana, Burkina Faso; Natougou, Burkina Faso, and Other exploration. The Company, through its subsidiaries, is engaged in gold mining activities, including exploration, development and operations. Its properties include Mana project, which is located in Burkina Faso that includes the satellite Siou and Fofina deposits; Natougou advanced gold deposit, which is located approximately 320 kilometers east of Ouagadougou, and consists of a drill database of over 170 diamond, 625 multi-purpose (reverse-circulation (RC) pre-collar and core tail) and 550 RC drill holes; Banfora project, which is located approximately 200 kilometers south west of Mana, and Nabanga project, which is located approximately 250 kilometers south-east of Ouagadougou.

  • Market Cap: $1,743.06 (mm)
  • Revenue LTM: $392.77 (mm)
  • Cash on Hand: $171.29 (mm)
  • Free Cash Flow: $96.54 (mm)