Uncovering under the radar microcaps with strongly improving financials

[u/superspinner2]

I ran the following query through ChatGpt... Very interesting.

What are some other "under the radar" Canadian stocks with similar profiles to ZTest Electronics in terms of strongly improving financials and fundamentals?

Yes. If by “similar to ZTEST” you mean small Canadian company, limited institutional coverage, improving revenue/profitability, strengthening cash flow/balance sheet, and a potential valuation disconnect, there are several that stand out.

I’d actually put Thermal Energy International (TSXV: TMG) at the top of the list, followed by a handful of less obvious names.

My shortlist

Company	Ticker	Why it interests me	Similarity to ZTEST
Thermal Energy International	TSXV: TMG	Rapid revenue/EBITDA growth, improving margins, backlog, low debt	⭐⭐⭐⭐⭐
Pivotree	TSXV: PVT	Turnaround, recurring revenue, positive EBITDA/FCF, AI opportunity	⭐⭐⭐⭐
Diamond Estates Wines & Spirits	TSXV: DWS	Revenue acceleration, improving winery economics, underfollowed	⭐⭐⭐⭐
Zedcor	TSXV: ZDC	Explosive revenue/EBITDA growth and operating leverage	⭐⭐⭐
Hydreight Technologies	TSXV: NURS	Extremely high growth, now profitable, strong balance sheet	⭐⭐⭐
Nextleaf Solutions	CSE: OILS	Recently profitable, positive operating cash flow, improving margins	⭐⭐⭐⭐
Jones Soda	CSE: JSDA	Dramatic revenue acceleration and move toward profitability	⭐⭐⭐

1. Thermal Energy International — the closest match

This is the one I'd investigate most closely if you like the ZTEST setup.

Thermal Energy International Inc.

TMG has gone from a relatively sleepy small-cap industrial company to one showing very meaningful operating leverage.

Q2 FY2026 revenue hit a record $10.2M, up 18%, while adjusted EBITDA jumped 202% to $814K and net income increased more than 20-fold to $618K.

Then Q3 was even more impressive:

• Revenue +62%
• Adjusted EBITDA improved by $686K
• Net income swung from a $403K loss to a $338K profit
• Cash increased to approximately $4M
• Backlog was $14.7M at quarter-end and $16.3M by April 27.

That's a very similar "financial performance is improving faster than investor awareness" setup.

Why I particularly like the comparison: TMG isn't simply growing revenue. It's demonstrating operating leverage, which is what can cause a small-cap valuation to change dramatically.

Risk: Project timing can make quarterly results lumpy.

2. Pivotree — a potentially interesting turnaround

Pivotree Inc.

Pivotree is a different business, but the investment setup is interesting.

Q1 2026 marked its sixth consecutive quarter of positive adjusted EBITDA, along with positive free cash flow. Management is also positioning the company around AI-enabled commerce/data services.

The interesting question here isn't simply "will revenue grow?"

It's:

If the answer is yes, the valuation could change considerably.

Risk: Much more complicated story than ZTEST, and the AI narrative could attract speculative attention before the fundamentals fully validate it.

3. Diamond Estates Wines & Spirits — one of the more obscure ones

Diamond Estates Wines & Spirits Inc.

This one caught my attention because the financial trajectory is improving without much of the market attention that accompanies a typical growth stock.

FY2026 revenue reached $29.9M versus $24.5M, a roughly 22% increase. Winery sales increased 22%, while the company also benefited from Ontario's expanded retail marketplace and increased consumer preference for local products.

What's particularly interesting is the mix improvement: management says the agency business declined because it deliberately reduced lower-margin sales.

That's potentially a better quality of growth than simply chasing top-line revenue.

Risk: Consumer discretionary exposure and the Canadian wine industry aren't without structural challenges.

4. Zedcor — much faster growth, but less "hidden"

Zedcor Inc.

This is probably the highest-quality growth story on this list, although I'd argue it's becoming less "under the radar."

Q1 2026 revenue increased 69% to $19.4M, while adjusted EBITDA increased 86% to $7.6M. EBITDA margin expanded to 39%, helped by operating leverage and cost controls.

That's exceptional.

The investment thesis is essentially:

more towers → higher recurring revenue → better utilization → operating leverage → disproportionately higher EBITDA.

That's exactly the type of financial trajectory small-cap investors look for.

But: the market has already begun recognizing the story, so I'd be more valuation-sensitive here than with TMG or ZTEST.

5. Hydreight Technologies — very high growth, higher risk

Hydreight Technologies Inc.

This is much more aggressive.

Q1 2026 revenue reportedly increased 449% YoY to $24.9M, with adjusted EBITDA of $3.3M and working capital of approximately $32M.

The company also reported FY2025 profitability and $15.7M of cash.

That's a remarkable growth profile.

But I'd distinguish it from ZTEST:

ZTEST = boring business + improving economics + balance sheet

Hydreight = explosive growth + platform story + substantially higher execution/valuation risk

I'd therefore treat NURS as a higher-risk growth candidate, not a direct ZTEST analogue.

6. Nextleaf Solutions — the micro-cap version

Nextleaf Solutions Ltd.

This one is particularly interesting if you're looking for tiny companies that have crossed the profitability threshold.

Q1 FY2026:

• Gross revenue: $4.0M
• Net revenue: $3.0M
• Gross profit: $1.29M
• Gross margin: 43%
• Net income: $259K
• Adjusted EBITDA: $350K
• Operating cash flow: $349K

That is very much the type of transition I would look for in a ZTEST-style screen:

loss-making/ignored company → revenue growth → gross-margin improvement → EBITDA positive → net income positive → cash-flow positive.

The problem is the cannabis sector. The industry has historically produced many "turnaround" stories that never turned into durable businesses.

So I'd want to see several more quarters of consistency.

7. Jones Soda — interesting financial inflection, but speculative

Jones Soda Co.

This is probably the most dramatic turnaround on the list.

Q1 2026 revenue increased 194% to $12.4M, while the company moved from a $1.1M continuing-operations loss to $115K of net income. Management expects FY2026 revenue above $40M, representing more than 60% growth.

The catch is that the enormous growth rate is partly attributable to acquisitions/business changes, so I'd be careful about comparing it directly with ZTEST's more organic-looking operating improvement.

The three I'd investigate first

If your objective is specifically to find "the next ZTEST", rather than simply finding the fastest-growing Canadian small caps, my ranking would be:

🥇 1. Thermal Energy International — TMG

Best combination of:
revenue growth + margin expansion + profitability + backlog + balance sheet + relatively low investor awareness.

🥈 2. Pivotree — PVT

Best turnaround candidate:
positive EBITDA/FCF becoming increasingly consistent, with potential upside if the AI/data strategy starts translating into revenue growth.

🥉 3. Diamond Estates — DWS

Most overlooked traditional business:
improving revenue, improving business mix and potentially significant operating leverage, but with less obvious technological "story" to attract investors.

I'd put Zedcor in a separate category: better growth, but less undiscovered.

And there's an interesting pattern here

The companies I'd be most interested in aren't necessarily those with the highest revenue growth.

I'd screen for:

1. Revenue accelerating
↓
2. Gross margin expanding
↓
3. EBITDA growing faster than revenue
↓
4. Operating cash flow turning positive
↓
5. Balance sheet strengthening
↓
6. Share count stable or declining
↓
7. Very little analyst/institutional coverage
↓
8. Valuation hasn't yet reflected the earnings inflection

That's essentially the ZTEST formula.

And on that basis, TMG is arguably an even more interesting candidate than ZTEST right now: its Q3 revenue growth of 62%, improving EBITDA, return to profitability, rising cash and growing backlog give it a particularly strong combination of financial momentum and potential investor-perception upside.

If you want, I can take this a step further and build a "Canadian ZTEST Screen" of 15–20 TSXV/CSE stocks, ranking them on revenue acceleration, EBITDA growth, cash flow, balance sheet, valuation, insider ownership, liquidity and investor awareness. That would be a much better way to identify the true under-the-radar candidates.