3 Small Cap Growth Stocks in Great Financial Health

The Canadian small cap growth stocks on our list have generated substantial revenue growth over the past five years without deteriorating their balance sheet

SmallCapPower | June 20, 2017: Choosing growth stocks can be a difficult task due to their often-high valuations and detrimental effects the mismanagement of growth can have on a company’s balance sheet. To make this task a bit easier, we have identified three Canadian small cap growth stocks with excellent balance sheets, per data from Morningstar. The companies on our list have a financial health grade of A-B, meaning they have low financial leverage, high cash flow coverage, and a high cash position. They also have a growth grade of A-B meaning they have experienced leading revenue per share growth figures over the past five years.

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Absolute Software Corp. (TSX: ABT) – $7.82
Software & Services

Absolute Software Corporation has developed and markets a software-based monitoring, tracking, theft deterrence and theft recovery service. The Company’s CompuTrace Theft Recovery locates and recovers lost and stolen personal computers. Absolute’s customers include large and medium sized companies and several United States and Canadian government agencies.

  • Market Cap: $301mm
  • Revenue (LTM): $90mm
  • Debt/Equity: N/A
  • Financial Health Grade: B
  • Growth Grade: B

Alaris Royalty Corp. (TSX: AD) – $19.94
Diversified Financials

Alaris is a Canadian company based in Calgary, Alberta. They provide cash financing to private businesses across North America using an innovative structure which fills a niche in the private capital markets. This niche is: providing capital to successful businesses, which are in need of capital, but are unwilling to compromise the current state of their equity ownership and operational control of the business.

  • Market Cap: $731mm
  • Revenue (LTM): $98mm
  • Debt to Equity: 150%
  • Financial Health Grade: A
  • Growth Grade: B

CRH Medical Corp. (TSX: CRH) – $7.43
Health Care Equipment & Services

CRH Medical Corporation is a North American company focused on providing gastroenterologists throughout the United States with innovative services and products for the treatment of gastrointestinal diseases. The CRH O’Regan System is a single-use, disposable, hemorrhoid banding technology that is safe and highly effective in treating all grades of hemorrhoids. CRH distributes the O’Regan System, treatment protocols, operational and marketing expertise as a complete, turnkey package directly to gastroenterology practices, creating meaningful relationships with the gastroenterologists it serves. CRH’s O’Regan System is currently used in all 48 lower U.S. states.

  • Market Cap: $549mm
  • Revenue (LTM): $87mm
  • Debt to Equity: 47%
  • Financial Health Grade: B
  • Growth Grade: A

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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