The Canadian small caps on our list are considered attractive on the basis of their low price-to-book ratio
SmallCapPower | May 14, 2019: Price-to-book ratio is a common metric used by value investors to determine whether a stock is relatively overvalued or undervalued. It is calculated by taking a stock’s market cap and dividing it by its book value, where book value is calculated as assets minus liabilities. Typically, a ratio under 1 implies that a stock is undervalued as the stock is trading on the market for less than its intrinsic value. For example, if a stock has a price-to-book of 0.5x, it means that the stock is trading at 50 cents on the dollar. Thus, if the company were to liquidate of all its assets, it would be worth double what it is trading at. Today we have discovered four Canadian small caps trading on the TSX with market caps under $1B with a price-to-book ratio under 1.0x.
MAV Beauty Brands Inc (TSX:MAV) – $6.97
Personal Products
MAV Beauty Brands is a developer and marketer of personal care products. The Company offers a broad variety of hair care, body care, and beauty products through three complementary brands: Marc Anthony True Professional, Renpure, and Cake. MAV’s products are sold in over 25 countries throughout he world and are listed in over 60,000 stores across 100 major retailers. MAV was formerly known as MAC Topco Holdings Inc but changed its name to MAV Beauty Brands Inc in May 2018.
- Market Cap: $261.9 Million
- YTD Return: -29.5%
- Price-to-Book Value: 0.89
- 90-Day Average Volume: 52,000
DHX Media Ltd (TSX:DHX) – $1.92
Movies and Entertainment
DHX Media engages in the development, production, distribution, broadcasting, and licensing of television and film programs for conventional, specialty terrestrial, and cable/satellite television broadcasters worldwide. DHX Media focuses on children’s, youth, and family productions. DHX also sells initial broadcast rights, packages of programs, and reuse rights to existing series, all to individual broadcasters and other content exhibitors. Additionally, DHX holds broadcast licenses for Family Channel, Family Jr., Telemagino, and Family CHRGD television channels.
- Market Cap: $259.03 Million
- YTD Return: -13.96%
- Price-to-Book Value: 0.76
- 90-Day Average Volume: 198,000
Indigo Books & Music Inc (TSX:IDG) – $9.51
Specialty Stores
Indigo Books & Music is a Canada-based book, gift and toy retailer. The Company operates stores in approximately 10 provinces and a territory in Canada and offers online sales through its indigo.ca website. It operates approximately 90 superstores under the banners Chapters and Indigo, and about 120 small format stores under the banners Coles, Indigospirit, SmithBooks and The Book Company. Indigo has interests in Calendar Club of Canada Limited Partnership (Calendar Club), which operates seasonal kiosks and year-round stores in shopping malls across Canada. Its loyalty programs include Irewards, which is a fee-based loyalty program, and the plum rewards program, which is a free points-based loyalty program.
- Market Cap: $258.1 Million
- YTD Return: -14%
- Price-to-Book Value: 0.65
- 90-Day Average Volume: 10,000
TVA Group Inc (TSX:TVA.B) – $2.03
Broadcasting
TVA Group is a Quebec-based media and communications company. It is Quebec’s dominant conventional television network and has about a 60% share of Quebec’s magazine market. The Company operates through its Broadcasting, Magazine, and Film Production segments. Recently, TVA Group has expanded its product portfolio with the introduction of new specialty channels. It has made significant investments in NHL (National Hockey League) content through its TVA Sports station.
- Market Cap: $87.7 Million
- YTD Return: 26.9%
- Price-to-Book Value: 0.33
- 90-Day Average Volume: 5,000
Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.
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