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The Globe and Mail Shirley Won Published February 3, 2021
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Canadian small-company stocks are back in the spotlight again, helped by tailwinds in multiple sectors at the same time.
The S&P/TSX Venture Composite Index, a broad-market indicator of domestic microcap securities, surged 51.6 per cent last year versus a 5.6-per-cent gain for the S&P/TSX Composite Index, including dividends.
The venture index continued its climb in January. Resource stocks largely drove past bull markets, but technology, clean-energy, health care, cannabis and even cryptocurrency-related stocks have now joined the party.
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Microcap stocks offer potential for multibaggers, but keep in mind that they come with higher risk. These young companies may not be profitable or have revenue yet. Management can stumble or face setbacks. Companies may not raise enough capital to grow, while financings can dilute existing shareholders.