While most financial advisors will direct you to a healthy portion of established, large-capitalization enterprises, small-cap stocks to buy provide extra oomph for willing participants. For example, age can be a determining factor in whether smaller, more speculative enterprises are appropriate. Basically, with greater time, investors can patiently ride out volatility versus those who seek to retire next year.
As well, small-cap stocks to buy facilitate mathematical leverage. Specifically, for a relatively small amount of money, if a diminutive enterprise fires on all cylinders, the underlying equity unit might skyrocket. Therefore, the small caps can be extremely appealing to investors that may not have many discretionary funds at their disposal.
In contrast, the large caps rarely make big percentage-wise moves, possibly testing their stakeholders’ patience. For those who want to live a bit dangerously, these are the small-cap stocks to buy.
|CCRN||Cross Country Healthcare||$22.28|
|AMRK||A-Mark Precious Metals||$34.52|
Billed as one of the largest operators of convenience stores and wholesalers of fuel in the U.S., Arko (NASDAQ:ARKO) may benefit from fundamental relevancies. Essentially, as society enters into full normalization mode, downstream energy operators like Arko may see increased demand. Right now, the company commands a market cap of $1 billion. Since the start of the year, ARKO dipped nearly 5%.
On the financials, Arko brings a mixed bag to the table. To get the bad stuff out of the way, it features middling strengths in the balance sheet. Also, its net margin of 0.78 ranks worse than 62.2% of the competition. Finally, it’s not particularly attractive from a trailing-earnings-based valuation.
However, on the positive side, Arko benefits from a three-year revenue growth rate of 6.2%. Further, ARKO trades at a trailing sales multiple of only 0.12. As a discount to revenue, the company ranks better than 92.84% of the field. Finally, Wall Street analysts peg ARKO as a consensus moderate buy. Their average price target comes out to $10.38, implying 26% upside potential. Thus, it intrigues me as one of the potential small-cap stocks to buy.
An American food distributor and grocery store retailer, the core business of SpartanNash (NASDAQ:SPTN) centers on distributing food to independent grocers, military commissaries, and corporate-owned retail stores. Presently, SpartanNash carries a market cap of $859.7 million. However, it’s a volatile trade, shedding over 19% of equity value since the January opener.
Financially, the company will require patience among prospective stakeholders. In terms of profitability, SpartanNash could use some work. For instance, its trailing-year net margin of 0.36 ranks worse than nearly 74% of its peers. As well, its sales growth could use some improvement.
That said, SpartanNash benefits from an Altman Z-Score of 4.98, reflecting low bankruptcy risk over the next two years. Also, the market prices SPTN at a forward multiple of 9.07. As a discount to projected earnings, the company ranks better than 87.3% of sector rivals.
Lastly, covering analysts peg SPTN as a consensus moderate buy. Their average price target stands at $32.50, implying 31% upside potential. As a fundamentally relevant example of small-cap stocks to buy, SPTN could be interesting.
Ichor Holdings (ICHR)
Based in California, Ichor Holdings (NASDAQ:ICHR) provides expertise in critical systems engineering and manufacturing. As well, Ichor features extensive proprietary knowledge of gas and chemical delivery systems, and advanced reactor process equipment. Currently, ICHR carries a market cap of over $895 million. It ranks as one of the more promising small-cap stocks to buy, gaining over 11% since the year’s start.
In addition, Ichor benefits from overall solid financials. Perhaps the most glaring weakness stems from less-than-stellar profitability. For example, its net margin is 5.69%, which ranks worse than 60.3% of competitors.
On the other hand, Ichor’s three-year revenue growth rate comes in at 17.5%, outpacing 67.37% of the field. Also, its book growth rate during the same period hits 27.6%, beating out 80.28% of rivals. In closing, covering analysts peg ICHR as a consensus strong buy. Their average price target stands at $39.80, implying over 34% upside potential.
Vertex Energy (VTNR)
Headquartered in Houston, Texas, Vertex Energy (NASDAQ:VTNR) is a downstream energy player (specifically through its refining business). As well, the company deployed investments in renewable solutions. It also features acumen in energy recovery (reuse) processes. At the moment, Vertex features a market cap of just under $750 million. Since the start of the year, VTNR gained a blistering 59% in equity value.
Admittedly, Vertex requires some patience – a similar perspective for many other small-cap stocks to buy. On the less-than-ideal space, its net margin slightly dipped into negative territory on a trailing-year basis. Also, it’s overvalued relative to tangible-book value and operating cash flow.
On the other end, Vertex features a triple-digit revenue growth rate in the past three years (which will probably decline). However, its book growth rate during the same period shot up to 61.5%, outpacing 97% of its rivals. Also, it’s priced at 0.25 times sales, which is extremely undervalued.
Turning to Wall Street, analysts peg VTNR as a consensus moderate buy. Their average price target stands at $13.65, implying over 44% upside potential.
Cross Country Healthcare (CCRN)
Based in Boca Raton, Florida, Cross Country Healthcare (NASDAQ:CCRN) is a workforce solutions provider in the broader healthcare industry. While CCRN narrative-wise ranks among the most relevant small-cap stocks to buy, it hasn’t demonstrated it in the charts. Since the beginning of this year, CCRN fell nearly 13%. However, in the past 365 days, it managed to gain nearly 9%.
Astute contrarians may want to use the red ink in their favor. Overall, Cross Country delivers solid financials. Perhaps the most glaring vulnerability is a high debt load relative to cash. Still, Cross Country’s Altman Z-Score hits 5.74, reflecting low bankruptcy risk. Operationally, CCRN comes alive compared to many other small-cap stocks to buy. Its three-year revenue growth rate pings at 48.2%, outpacing 91.22% of its peers. Also, its net margin is 6.71%, beating out nearly 72% of the industry.
Looking to the Street, analysts peg CCRN as a consensus moderate buy. Their average price target hits $36, implying nearly 52% upside potential.
A-Mark Precious Metals (AMRK)
Hailing from El Segundo, California, A-Mark Precious Metals (NASDAQ:AMRK) is a trading company for rare and valuable metals. Because of the brewing fear trade stemming from events like the banking sector fallout, AMRK could be enticing as one of the small-cap stocks to buy. To be fair, shares dipped nearly 2% since the January opener. However, in the trailing month, AMRK gained over 15% of its equity value.
Financially, investors will need to depend on a cross-section of positive performance stats and narrative-driven catalysts. Perhaps most glaringly, A-Mark features high debt relative to the amount of cash it holds. As well, revenue growth on a three-year basis went slightly negative.
On the flip side, A-Mark features a strong return on equity (ROE) of 32.25%. In addition, the market prices AMRK at a trailing multiple of 5.41. As a discount to earnings, A-Mark ranks better than nearly 85% of the competition. Finally, analysts peg AMRK as a consensus moderate buy. Their average price target stands at $56.50, implying over 67% upside potential.
Kiniksa Pharmaceuticals (KNSA)
Closing out this discussion of small-cap stocks to buy, Kiniksa Pharmaceuticals (NASDAQ:KNSA) presents an intriguing scientific profile. Primarily, the biotechnology firm focuses on human monoclonal antibody inhibitors to address certain autoimmune diseases. However, the market doesn’t quite believe in the opportunity. Since the Jan. opener, KNSA gave up more than 24% of its equity value.
Still, it’s up over 8% in the past 365 days, if that helps convince speculators. Financially as well, Kiniksa offers much food for thought. Perhaps most noticeably, the biotech features a robust balance sheet. For example, its cash-to-debt ratio of 32.2 times outpaces 65.2% of the field. Also, its Altman Z-Score pings at 7.09, reflecting low bankruptcy risk.
Notably, Kiniksa features an ROE of 71.35%, blowing past nearly 99% of the competition. Also, it indicates an extremely high-quality business. Lastly, analysts peg KNSA as a unanimous strong buy. Their average price target stands at $21.50, implying almost 97% upside potential.
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On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.