Canada stocks higher at close of trade; S&P/TSX Composite up 0.40%

Energy stocks were edging up late Monday afternoon, with the NYSE Energy Sector Index adding 0.2% and the Energy Select Sector SPDR Fund (XLE) increasing 0.6%.

The Philadelphia Oil Service Sector index was rising 1.1%, and the Dow Jones US Utilities index was 0.2% higher.

Front-month West Texas Intermediate crude oil was 0.1% lower at $69.38 a barrel, and the global benchmark Brent crude contract was down 0.2% to $72.78 a barrel. Henry Hub natural gas futures fell 2.1% to $3.67 per 1 million BTU.

In corporate news, TPG's climate investment arm is in talks to buy Altus Power , Reuters reported. Altus shares jumped 12.5% and TPG was down 1.8%.

Lithium Americas shares jumped past 6% after the firm said it closed its joint venture with General Motors (GM) to fund, develop and operate the Thacker Pass lithium project in Humboldt County, Nevada.

Vermilion Energy shares added 0.3% after the company said it has agreed to buy Westbrick Energy for about $1.08 billion.

Talen Energy said Monday the US Federal Energy Regulatory Commission issued an order deferring the company's request for a rehearing of its rejected agreement to increase power at its Susquehanna, Pennsylvania, nuclear plant to an Amazon.com (AMZN) data center. Talen shares rose 1.2%.

The broad market exchange-traded fund SPDR S&P 500 ETF Trust slipped 0.02% and the actively traded Invesco QQQ Trust advanced 0.4% in Monday's premarket activity, as investors assessed next year's interest rate outlook after the Fed signaled prolonged higher rates.

US stock futures were also mixed, with S&P 500 Index futures up 0.1%, Dow Jones Industrial Average futures slipping 0.2%, and Nasdaq futures gaining 0.4% before the start of regular trading.

November's Chicago Fed National Activity Index will be released at 8:30 am ET, followed by the Conference Board's consumer confidence report for December at 10 am ET.

In premarket action, bitcoin was up by 0.6%, while the cryptocurrency fund ProShares Bitcoin Strategy ETF was down by 4.8%.

Power Play:

Consumer

The Consumer Staples Select Sector SPDR Fund was down 0.1%, while the Vanguard Consumer Staples Fund was 1.2% lower. The iShares US Consumer Staples ETF was inactive, and the Consumer Discretionary Select Sector SPDR Fund gained 0.4%. The VanEck Retail ETF and the SPDR S&P Retail ETF were inactive.

Honda Motor shares were up more than 14% pre-bell after the company and Nissan Motor said they had signed a memorandum of understanding to discuss the possibility of a merger and create a joint holding company.

Winners and Losers:

Technology

Technology Select Sector SPDR Fund gained 0.5%, and the iShares US Technology ETF was 0.3% higher, while the iShares Expanded Tech Sector ETF was up 0.5%. Among semiconductor ETFs, SPDR S&P Semiconductor ETF was inactive, while the iShares Semiconductor ETF rose by 1.2%.

Xerox Holdings shares were up 5.6% in recent Monday premarket activity after the company said that it has agreed to acquire Lexmark International from Ninestar, PAG Asia Capital, and Shanghai Shouda Investment Center for $1.5 billion, including assumed liabilities.

Health Care

The Health Care Select Sector SPDR Fund advanced 0.2%. The Vanguard Health Care Index Fund was down 0.7% while the iShares US Healthcare ETF was inactive. The iShares Biotechnology ETF was inactive.

Zomedica stock was down 3.4% premarket after the company said that it has launched two new canine assays for its Truforma in-clinic biosensor testing platform.

Financial

Financial Select Sector SPDR Fund retreated 0.1%. Direxion Daily Financial Bull 3X Shares was down 0.6%, while its bearish counterpart Direxion Daily Financial Bear 3X Shares was 0.5% higher.

National Health Investors shares were down 1.1% pre-bell Monday after Truist lowered the company's price target to $72 from $78.

Industrial

Industrial Select Sector SPDR Fund advanced 0.1%, the Vanguard Industrials Index Fund gained 0.2%, while the iShares US Industrials ETF (IYJ) was inactive.

Laser Photonics stock was up nearly 1% before the opening bell after the company said it received an order for its handheld continuous wave fiber laser machine for surface preparation from the Cooper Nuclear Station in Nebraska, US.

Energy

The iShares US Energy ETF gained 0.2%, while the Energy Select Sector SPDR Fund was up by 0.1%.

Vermilion Energy stock was up nearly 1% before Monday's opening bell after the company said it has agreed to acquire Westbrick Energy for $1.08 billion in cash.

Commodities

Front-month US West Texas Intermediate crude oil retreated 0.3% to $69.28 per barrel on the New York Mercantile Exchange. Natural gas gained 2.1% to $3.83 per 1 million British Thermal Units. United States Oil Fund declined by 0.6%, while the United States Natural Gas Fund rose by 0.8%.

Gold futures for February were down 0.6% to $2,629 an ounce on the Comex, while silver futures gained 0.7% at $30.16 an ounce. SPDR Gold Shares retreated 0.4%, while the iShares Silver Trust was 0.2% higher.

In December 2024, the Federal Reserve reduced interest rates by 25 basis points during the Federal Open Market Committee (FOMC) meeting, bringing the target range to 4.25%–4.5%. This move underscores the Fed's dedication to its dual mandate of promoting maximum employment and maintaining price stability.

Small-cap stocks can be particularly attractive during periods of interest rate cuts due to their growth-oriented nature and sensitivity to economic changes. Lower rates reduce borrowing costs, enabling these smaller companies to invest in expansion and innovation more affordable.

Against this backdrop, let’s compare two small-cap stocks, Expensify, Inc. and Jowell Global Ltd. , to analyze which small-cap stock offers more upside.

The Case for Expensify, Inc. Stock

Valued at $320.27 million by market cap, Expensify, Inc. provides a cloud-based expense management software platform to individuals and corporations, small and mid-sized businesses, and enterprises in the United States and internationally. The company's platform enables users to manage corporate cards, pay bills, generate invoices, collect payments, and book travel.

EXFY’s stock has gained 60.7% over the past three months to close the last trading session at $3.60. Over the past month, the stock has surged 17.3%.

EXFY’s trailing-12-month gross profit margin of 54.24% is 6.9% higher than the industry average of 50.93%. The stock’s trailing-12-month asset turnover ratio of 0.71x is 14.9% higher than the industry average of 0.62x.

For the fiscal third quarter that ended September 30, 2024, EXFY’s revenue was reported at $35.41 million. Its non-GAAP net income stood at $5.43 million, compared to a net loss of $6.74 million in the previous-year quarter. Its adjusted EBITDA stood at $9.68 million.

Street expects EXFY’s revenue for the fourth quarter (ending December 2024) to increase 2.3% year-over-year to $36.03 million. Its EPS for the current quarter is expected to increase 86.4% year-over-year to $0.07. Moreover, the company surpassed the consensus EPS estimates in three of the trailing four quarters, which is impressive.

EXFY’s POWR Ratings reflect its robust outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

EXFY has an A grade for Growth and a B for Value and Sentiment. It is ranked #32 out of 126 stocks in the Software - Application industry.

The Case for Jowell Global Ltd. stock

Valued at $6.10 million by market cap, Jowell Global Ltd. engages in the online retail of cosmetics, health and nutritional supplements, and household products in China.

JWEL’s stock has declined by 14.1% over the past month to close the last trading session at $2.81.

JWEL’s trailing-12-month gross profit margin of 2.04% is 94.5% lower than the industry average of 37.43%. Its trailing-12-month CAPEX/Sales of 0.01% is 99.8% lower than the industry average of 2.95%.

JWEL’s net revenue for the six months that ended June 30, 2024, was reported at $85.68 million. The company’s net loss and net loss per share came in at $3.78 million and $1.74, respectively.

JWEL’s bleak fundamentals are reflected in its POWR Ratings. The stock has an overall D rating, translating to a Sell in our proprietary rating system.

The stock has an F grade for Quality and a D for Growth. JWEL is ranked #53 out of 60 stocks in the Internet industry.

In addition to the POWR Ratings I’ve just highlighted, you can see JWEL’s ratings for Value, Stability, Momentum, and Sentiment here.

Expensify Inc. (EXFY) vs. Jowell Global Ltd. (JWEL): Which Small-Cap Stock Offers More Upside?

Small-cap companies tend to be more domestically focused, benefiting directly from economic expansions and consumer spending increases. Small-cap stocks provide diverse sector exposure, helping to mitigate regulatory and sector-specific risks while offering a broad array of investment opportunities.

Small-cap companies EXFY and JWEL stand to capitalize on the optimistic industry outlook. However, EXFY’s higher profitability and strong financials favor it as the better small-cap stock pick.

Our research shows that the odds of success increase when one invests in stocks with an Overall Rating of Strong Buy or Buy. View all the top-rated stocks in the Software - Application industry here and the Internet industry here.

What To Do Next?

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EXFY shares closed at $3.60 on Friday, up $0.04 (+1.12%). Year-to-date, EXFY has gained 45.75%, versus a 25.54% rise in the benchmark S&P 500 index during the same period.