The Canadian small cap stocks on our list could have issues with debt if their operations don’t improve
SmallCapPower | June 23, 2017: Today we have identified four Canadian small cap stocks that may have trouble paying off debt, based on their high net debt to EBITDA ratios, as per data from Thomson Reuters. The ratio is an indicator of a company’s ability to pay off debt using their EBITDA and cash on hand, assuming EBITDA stays constant.
Largo Resources Ltd. (TSX: LGO) – $0.45
Diversified Mining
Largo Resources Ltd. is a natural resource development and exploration company engaged in the acquisition, exploration, development and operation of mining and exploration properties located in Brazil and Canada. The Company operates through two segments: mine properties, and exploration and evaluation properties. The Company holds interest in the Maracas Menchen Mine property, Currais Novos tungsten tailings property and Campo Alegre de Lourdes iron-vanadium property. The Maracas Menchen Mine property is located in the eastern Bahia State of Brazil. The Currais Novos tungsten tailings property is located approximately 180 kilometers from Natal in the State of Rio Grande do Norte, Brazil.
- Market Cap: $206,900,671
- EBITDA (LTM): $252,000
- Net Debt: $275,520,000
- Net Debt to EBITDA: 1,068x
US Financial 15 Split Corp (TSX: FTU) – $0.92
Mutual Funds
US Financial 15 Split Corp. is a mutual fund corporation that invests primarily in an actively managed portfolio of common shares of the United States financial services companies. The Company’s investment objectives are to provide holders of Preferred Shares with cumulative preferential cash dividends in an amount equal to approximately 5.25% per annum of the net asset value per Unit calculated as at the end of the preceding month, payable to holders of Preferred Shares of record on the last business day of such month, and to provide holders of Class A Shares with such dividends as the directors of the Company may from time to time determine.
- Market Cap: $2,596,781
- EBITDA (LTM): $115,670
- Net Debt: $23,103,700
- Net Debt to EBITDA: 200x
Canam Group Inc (TSX: CAM) – $12.29
Iron & Steel
Canam Group Inc is a Canada-based company engaged in designing integrated solutions and fabricating products for the North American construction industry. The Company operates through the construction products segment, which includes many complementary goods and services. The Company’s service offer extends from the preconstruction phase to project management, including the erection of structural steel components. It also offers customers an array of complementary services ranging from virtual design and construction to Building Information Modeling (BIM), and the outsourcing of technical drawings. The Company operates approximately 20 plants across North America.
- Market Cap: $557,496,104
- EBITDA (LTM): $7,501,000
- Net Debt: $296,083,000
- Net Debt to EBITDA: 42x
Greenfields Petroleum Corp. (TSXV: GNF) – $0.20
Oil & Gas Exploration and Production
Greenfields Petroleum Corporation is a junior oil and natural gas exploration and development company focused on the development and production of oil and gas reserves principally in the Republic of Azerbaijan (Azerbaijan). The Company, through Bahar Energy Limited, holds interest in the Bahar Project. The Bahar project includes over 76,500 acres of producing oil field and a producing gas field located approximately 10 kilometers offshore Azerbaijan in shallow waters (over 10 meters) of the Caspian Sea.
- Market Cap: $31,055,273
- EBITDA (LTM): $543,517
- Net Debt: $59,435,808
- Net Debt to EBITDA: 109x
Disclosure: Neither the author nor any of the principals at Small Cap Power, or their family members, own shares in any of the companies mentioned above.
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