Unveiling Jordan Zinberg’s Top Picks: Payfare, Ag Growth, and Foraco

Discover the Hidden Gems in Canadian Small and Mid-Cap Stocks with Jordan Zinberg's Expert Picks

Editorial Team (ET)May 7, 2025

Jordan Zinberg is the president and CEO of Bedford Park Capital, a firm renowned for its strategic investments in Canadian small and mid-cap stocks. With a keen eye for undervalued assets and emerging opportunities, Zinberg has positioned his firm at the forefront of the Canadian equity market.

The first quarter of 2024 witnessed a robust performance in Canadian equities, particularly within the small and mid-cap segments. However, the second quarter saw these equities trading sideways, awaiting the trigger of the second-quarter earnings season. As markets awaken from their summer slumber, there is renewed optimism for significant movement in the upcoming months.

Emerging Themes in Small and Mid-Cap Stocks

In both the first and second quarters of 2024, Canadian small and mid-cap stocks have consistently outperformed their large-cap counterparts. This outperformance has been primarily driven by the energy and materials sectors. Nonetheless, promising opportunities have also emerged in other sectors, showcasing the diverse potential within the small and mid-cap space.

A notable resurgence in merger and acquisition (M&A) activity has characterized the small and mid-cap market segment. Companies like Park Lawn, Canadian Western Bank, Stelco, Tricon, and Sleep Country have recently been involved in M&A transactions. This surge in activity is largely attributed to attractive valuations, with private equity and strategic buyers identifying significant value in these companies.

Jordan Zinberg’s Top Picks

Payfare (PAY TSX)

Payfare is a pioneering fintech company that offers gig workers immediate access to their earnings, bypassing traditional pay cycles. This innovative approach has garnered partnerships with industry giants like Uber, Lyft, and DoorDash. As Payfare continues to explore new market segments, its financial performance remains strong, with an impressive return on equity and expanding margins. Despite its rapid growth, the stock trades at a relatively low valuation, making it an attractive investment opportunity.

Ag Growth (AFN TSX)

Ag Growth is a key player in the food infrastructure sector, providing equipment and engineering solutions to farmers and commercial customers. The company has demonstrated steady growth across multiple markets, with improving margins each year. Management has indicated that 2024's results will be more pronounced in the latter half of the year. Recently, Ag Growth confirmed and swiftly rejected a substantial premium acquisition offer from a competitor, highlighting its strong market position and growth potential.

Foraco (FAR TSX)

Foraco, a leading global drilling services contractor, operates across several major mining regions. The company has undergone a significant transformation, focusing on stable jurisdictions and securing long-term contracts with tier-one customers. This strategic shift has led to notable financial improvements. Despite consistent revenue and profit growth, Foraco remains relatively under the radar, trading at less than five times its projected 2025 earnings, presenting a compelling investment case.

In-Depth Analysis of Top Picks

Payfare stands out in the rapidly growing gig economy. Its strategic partnerships with Uber, Lyft, and DoorDash provide a solid foundation for expansion into new market segments. As the gig economy continues to grow, Payfare is well-positioned to capitalize on this trend, offering a unique value proposition to gig workers and investors alike.

Ag Growth operates in a critical sector, providing essential infrastructure to the food industry. The company's growth strategy focuses on expanding its market presence and improving margins. With the global demand for food infrastructure on the rise, Ag Growth's competitive landscape remains favorable, positioning it for sustained growth.

Foraco's strategic focus on stable mining jurisdictions and long-term contracts with top-tier customers has significantly bolstered its financial performance. As the mining industry continues to evolve, Foraco's emphasis on stability and growth presents a promising future. The company's recent transitions have enhanced its market position, making it an attractive option for investors looking for stable yet profitable opportunities.

Comparative Analysis

Comparing the financial metrics of Payfare, Ag Growth, and Foraco reveals a strong growth trajectory across all three companies. Payfare's rapid revenue growth and expanding margins, Ag Growth's steady market expansion and improved profitability, and Foraco's consistent revenue increases and profitability underscore their investment potential.

Despite their strong financial performance, all three companies trade at attractive valuations. Payfare's low valuation relative to its growth rate, Ag Growth's market position and rejected acquisition offer, and Foraco's undervalued earnings forecast present compelling cases for investors seeking value investments in the small and mid-cap sectors.

Investment Considerations

Investing in small and mid-cap stocks comes with inherent risks. Market volatility can impact stock prices, sector-specific risks can influence performance, and company-specific risks can affect financial outcomes. Investors must consider these factors when evaluating potential investments.

Several growth catalysts can drive the performance of Payfare, Ag Growth, and Foraco. Market expansion, strategic partnerships, and favorable industry trends are key factors that could propel these companies forward. As they continue to execute their growth strategies, these catalysts will play a crucial role in their future success.

Conclusion

In summary, Jordan Zinberg's top picks for July 26, 2024, showcase the potential of Canadian small and mid-cap stocks. Payfare, Ag Growth, and Foraco each offer unique value propositions, strong financial performance, and attractive valuations. With the right market conditions and strategic execution, these stocks present robust investment opportunities for discerning investors.

Bloomberg

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