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Small-cap stocks are public companies that have market capitalizations ranging from $300 million to $2 billion. Since the share prices of these companies can be very volatile, some companies in the small-cap universe or in small-cap indexes can have market caps significantly higher than this range at any particular time. Some of the stocks classified as small caps include movie theater chain AMC Entertainment Holdings Inc. (AMC), printing and imaging company Eastman Kodak Co. (KODK), and retail drug store chain Rite Aid Corp. (RAD).
Small-cap stocks, as represented by the Russell 2000 Index, have outperformed the broader market, providing investors with a total return of 42.1% compared to the Russell 1000’s total return of 26.5% over the past 12 months. These market performance numbers and the statistics in the tables below are as of February 24, 2021.
Here are the top three small-cap stocks with the best value, the fastest growth, and the most momentum.
Best Value Small-Cap Stocks
These are the small-cap stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows you’re paying less for each dollar of profit generated.
Source: YCharts
- XBiotech Inc.: XBiotech is a clinical-stage biopharmaceutical company focused on developing monoclonal antibodies for treating a range of diseases, including cancer, vascular disease, inflammatory skin disease, and diabetes. The company announced in late January that its COVID-19 candidate, True Human antibody therapy, may also be effective at treating the COVID-19 variant that recently emerged in the U.K. and has been spreading across the U.S. XBiotech’s therapy targets a specific protein of the virus, the so-called “spike” protein, and thus neutralizes the virus’ ability to infect cells.
- VirnetX Holding Corp.: VirnetX, through its subsidiaries, develops software to facilitate real-time communications online. This includes voice over internet protocol, encryption, file transfer, streaming, and similar services.
- Community Health Systems Inc.: Community Health Systems owns, leases, and operates hospitals. It provides emergency room, general surgery, critical care, and other health services. The company also owns interests in physician practices, imaging centers, home health agencies, and ambulatory surgery centers.
Fastest Growing Small-Cap Stocks
These are the small-cap stocks with the highest year-over-year (YOY) earnings per share (EPS) growth for the most recent quarter after eliminating outliers. Rising earnings show that a company’s business is growing and is generating more money that it can reinvest or return to shareholders.
Source: YCharts
- Inari Medical Inc.: Inari Medical is a commercial-stage medical device company. It develops and manufactures products used to treat venous diseases, which are illnesses related to the blood veins, including various forms of clots. The company offers two minimally-invasive, catheter-based mechanical thrombectomy devices to treat some of these diseases.
- The Bancorp Inc.: Bancorp is a bank holding company that offers services such as interest bearing checking deposits, loan products, and online bill payment. The company recently reported financial results for its 2020 fiscal year (FY), which ended December 31, 2020. The bank’s net interest income for the year rose 37.9%, helping to boost net income by 55.3%.
- Retractable Technologies Inc.: Retractable Technologies designs and manufactures safety needle devices used by the healthcare industry. Its VanishPoint products are designed to prevent needlestick injuries and to prevent reuse.
Small-Cap Stocks with the Most Momentum
These are the small-cap stocks that had the highest total return over the last 12 months.
Source: YCharts
- Novavax Inc.: Novavax is a clinical stage biotechnology company that creates vaccines to address a wide range of infectious diseases using proprietary virus-like particle (VLP) technology. The company recently announced complete enrollment of PREVENT-19, its Phase 3 study in the U.S. and Mexico to evaluate the efficacy, safety, and immunogenicity of its COVID-19 vaccine. The company previously reported in late January an efficacy rate of 89.3% for its vaccine based on Phase 3 trials in the U.K.
- Digital Turbine Inc.: Digital Turbine offers a mobile services platform to provide portal management, user interface, content development, and billing technology that ensures responsible distribution of mobile entertainment. The company recently reported financial results for Q3 FY 2021, ended December 31, 2020. Net income rose 336.4% as net revenue increased 146.0% compared to the same three-month period a year ago.
- Veritone Inc.: Veritone is a cloud-based artificial intelligence (AI) media technology company. It provides a cloud-based service that enables real-time audio and video processing, search, audience analytics, and more.
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