Canadians with investment appetites but limited capital have two profitable buying opportunities this year end. InPlay Oil (TSX:IPO) and 5N Plus (TSX:VNP) are market-beating stocks trading for less than $3. Market analysts covering the small-cap stocks are bullish and have buy recommendations for both.
A dividend-growth stock in the making
Energy remains the top-performing sector as of mid-December 2022. It beats the TSX by a wide margin year to date at +46.05% versus -7.64%. InPlay Oil isnât as popular as other energy stocks, but itâs up 36.16% thus far this year. Also, at only $2.94 per share, the total return in 3.01 years is 343.01%, or a compound annual growth rate (CAGR) of 64.02%.
Market analystsâ 12-month average price target for IPO is $6.75 — a 129.6% return potential. Since the board of directors recently approved a $0.15 monthly cash dividend, the overall return in one year could be higher. Also, management said that itâs the inaugural dividend base of InPlay.
This $256.22 million junior oil and gas exploration and production company operates in Alberta and focuses on light oil production. It boasts long-lasting, low-decline properties with high drilling development and enhanced oil recovery potential. InPlay can also pursue exploration possibilities in underdeveloped lands.
Like most energy players, InPlay has had record-setting financial and operating results this year. In the third quarter (Q3) of 2022, comprehensive net income climbed 85.2% to $15.35 million versus Q3 2021. The average quarterly production increased 58% year over year to 9,495 barrels of oil equivalent per day (boe/d) — a new company record.
In the nine months that ended September 30, 2022, free adjusted funds flow soared 1,333.4 % to $36.58 million compared to the same period in 2021. At the end of Q3 2022, InPlayâs net debt is down 36% to $45.6 million versus the same quarter last year.
Because management remains upbeat about future commodity prices, it expects the strong operational results to continue. InPlay commits to providing top-tier production per-share growth and a return of capital to shareholders. Moreover, the energy stock is well positioned to deliver meaningful returns to shareholders over the long term through the base dividend and share-buyback program.Â
Niche: Fast-growing markets
5N Plus supplies specialty metals, alloys, and related chemicals globally. The products of this $223.5 million company are vital components in various consumer and industrial products. At $2.53 per share, the year-to-date gain and trailing one-year price return are 6.3% and 15.53%, respectively.
By deploying proprietary and proven technologies to meet customer demand and specifications, 5N hopes to secure long-term sourcing contracts with primary producers. It also offers value-added services like cradle-to-cradle recycling and research and development partnerships.
While the net loss in Q3 2022 widened nearly 750% to US$7 million versus Q3 2021, revenue rose 30.6% to US$66.37 million. Still, management said 5N has a built-in advantage and is well positioned in fastâgrowing markets. Double-digit growth rates should sustain in the coming years.
InPlay Oil and 5N Plus are exciting, price-friendly stocks that can deliver massive gains in the near term. The former is an upcoming dividend-growth stock with strong upside potential. Meanwhile, the latter is scratching the surface but should eventually realize its full potential by growing its captured markets.
Before you consider 5n Plus Inc., you’ll want to hear this.
Our market-beating analyst team just revealed what they believe are the 5 best stocks for investors to buy in December 2022 … and 5n Plus Inc. wasn’t on the list.
The online investing service they’ve run for nearly a decade, Motley Fool Stock Advisor Canada, is beating the TSX by 16 percentage points. And right now, they think there are 5 stocks that are better buys.
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* Returns as of 12/13/22
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Fool contributor Christopher Liew has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.