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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 significantly outperformed the broader market, providing investors with a total return of 88.5% compared to the Russell 1000’s total return of 54.4% over the past 12 months. These market performance numbers and the statistics in the tables below are as of April 26, 2021.
Here are the top three small-cap stocks with the best value, the fastest growth, and the most momentum. The market valuations of some of the companies listed below are above the generally agreed upper limit of $2 billion for a stock to be considered small cap. This tends to happen in periods of higher volatility, especially for momentum stocks. However, they are still classified as small cap because stocks are not re-indexed as fast as their prices move and valuations could drop after as volatility subsides.
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
- 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.
- Cannae Holdings Inc.: Cannae Holdings is a diversified holding company that invests in companies across multiple industries, including restaurants, technology, healthcare, financial services, and more.
- Unisys Corp.: Unisys is an information technology consulting company. It provides data analytics, mobility, security, network, and outsourcing services to the commercial, financial services, and government sectors. On April 12, 2021, the company announced the appointment of Dwayne L. Allen to the roles of chief technology officer (CTO) and senior vice president of Solution Innovation and Architecture. Allen previously worked for Microsoft Corp. (MSFT) as a global digital strategist.
These are the top small-cap stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly year-over-year (YOY) percentage revenue growth and their most recent quarterly YOY earnings per share (EPS) growth. Both sales and earnings are critical factors in the success of a company. Therefore ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one or the other figure unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of over 2,500% were excluded as outliers.
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.
- Cleveland-Cliffs Inc.: Cleveland-Cliffs mines iron ore and produces iron ore pellets, lumps, and other materials for use in the global steel industry. The company recently reported financial results for Q1 of its 2021 fiscal year (FY), the three-month period ended March 31, 2021. Cleveland-Cliffs posted net income of $41 million, a significant turnaround from a loss of $52 million in the year-ago quarter. Because the company’s earnings went from negative to positive, its EPS growth is not reported in the table above.
- Cannae Holdings Inc.: See above for company description.
These are the small-cap stocks that had the highest total return over the last 12 months.
Source: YCharts
- GameStop Corp.: GameStop operates a chain of video game and entertainment software stores. These stores sell video game hardware, software, and accessories globally. The soaring price of GameStop and other stocks in January prompted a federal investigation into market manipulation and other misconduct, with the U.S. Justice Department leading the probe. On April 19, 2021, the company announced that CEO George Sherman would be stepping down from his position on July 31, 2021, or earlier depending on the appointment of a successor. The move is just the latest in a series of changes that have been made by the company since Chewy Inc. (CHWY) co-founder Ryan Cohen became a member of the board in January.
- At Home Group Inc.: At Home Group owns and operates home decor stores. It provides furniture, home furnishings, wall decor, rugs and curtains, housewares, and more. The company announced on March 23, 2021, financial results for its FY 2021, which ended Jan. 30, 2021. The company’s net loss narrowed to $149.7 million from $214.4 million in FY 2020 as annual net sales rose 27.3%. At Home said that comparable store sales rose 19.4%, despite mandated store closures related to the COVID-19 pandemic in the first half of the year.
- Celsius Holdings Inc.: Celsius Holdings, through its subsidiaries, makes thermogenic calorie-burning beverages, which it sells via grocery, drug, and convenience stores, as well as gyms and nutrition stores.
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