In the last 25 years, small-cap stocks have been the origin of some of the best stocks to buy, In 1998, the stock price of Amazon was $7, while in 2010, the market capitalization of Tesla was a little over $1 billion.
Of course, not all small-cap business grows to be enormous. Although investing in small businesses can be lucrative, there are hazards involved that traders need to be aware of. Here is a detailed analysis of small-cap stocks and our selections for some of the top ones.
What are Small cap stocks?
Small market capitalization, abbreviated as “cap,” is the sum of a company’s share price and the number of outstanding shares. When a corporation’s market capitalization is between $300 million and $2 billion, the company is said to have a tiny market capitalization.
Small-cap corporations are frequently emerging businesses. Although they typically have high growth potential, they are also typically less durable than their bigger, more established counterparts. They frequently aren’t profitable.
Small-cap stock prices typically exhibit greater volatility over time than those of larger firms, and stock values can change significantly. However, in general, the chances that small-cap companies would outperform large-cap stocks increase with the length of the evaluation period.
As inflation continues to cause huge impacts across the world in 2022, these are some of the best small-cap stocks to consider buying:
- Carparts.Com – NASDAQ:PRTS
- ACM Research – NASDAQ:ACMR
- Arconic Corporation – NYSE:ARNC
- Apollo Medical Holdings, Inc. – NASDAQ:AMEH
- Perion Network – NASDAQ:PERI
CarParts.com, an online auto parts company once known as U.S. Auto Parts, has undergone a makeover. Sales increased during the COVID-19 epidemic as a result of the company streamlining its operations by combining its web products under the CarParts.com logo. CarParts is investing in marketing and technology, and the business is quickly expanding its distribution network. Now, it can deliver in two days to 80% of the nation.
The e-commerce firm also appears to be well-positioned for further expansion as a result of a semiconductor scarcity in the auto industry that is pushing up the cost of new and used cars. The stock appears to be more than just a pandemic tale, given the company’s long-term revenue growth targets of 20% to 25% and 8% to 10% adjusted EBITDA.
2. ACM Research
ACM Research uses the “picks-and-shovels” technique in the semiconductor business as a producer of cleaning tools for semiconductor wafers. ACM Research investment offers exposure to a sector with high growth potential without the worry of falling commodity chip prices.
ACM is a U.S. corporation that also does the majority of its operations in China, providing investors with a relatively secure way to invest in order to access the Chinese market. One of the few small-cap firms, ACM has both strong profitability and tremendous growth potential.
3. Arconic Corporation
Arconic Corporation produces and sells aluminium sheets in the United States, Canada, China, France, Germany, Hungary, Russia, the United Kingdom, and other countries. It also manufactures plates, extrusions, and architectural materials. The $2.28 billion in sales generated by Arconic Corporation in the third quarter of 2022 increased 20.6% year over year.
Arconic Corporation was included in 19 hedge fund portfolios during the second quarter, down from 25 during the previous quarter, according to Insider Monkey’s database. The majority stake in the business was held by William B. Gray’s Orbis Investment Management, which owned 6.5 million shares worth $184 million.
Despite being a small-cap stock, Arconic Corporation, along with Tesla, Alphabet, and Apple Inc., is one of the best stocks to watch in the present market situation.
4. Apollo Medical Holdings Inc.
Apollo Medical Holdings, Inc. is a United States – California business that specializes in unique health management through a technology-driven, physician-centric healthcare delivery platform. In October this year, Apollo Medical Holdings, Inc. disclosed that it had reached an agreement to buy nine primary care facilities in Houston, Las Vegas, and Fort Worth that are currently known as Valley Oaks Medical Group. Apollo Medical Holdings, Inc. plans to fund the transaction with cash and anticipates that it will conclude before the end of the fourth quarter of 2022.
William Blair analyst Ryan Daniels began covering Apollo Medical Holdings, Inc. on September 21 with an Outperform score and no price target. According to the analyst, the leadership team of Apollo Medical Holdings, Inc. is “really among the most outstanding in the advanced primary care area” and is “very experienced, physician-led.” A “solid value proposition to all three important elements in the healthcare supply chain,” in his opinion, is provided by Apollo Medical Holdings, Inc.’s operating model. The analyst argued that there are “myriad potentials” for the company to achieve organic growth.
At the end of the second quarter of 2022, 11 hedge funds held interests in Apollo Medical Holdings, Inc., worth $49 million, up from 11 funds holding stakes worth $42 million at the same time. The biggest shareholder in the company is Steven Ng and Andrew Mitchell’s Ophir Asset Management, which has 166,846 shares worth $30 million.
5. Perion Network
Along with more general advancements in connected TV and digital advertising, ad tech stocks have soared throughout the pandemic. Perion Network, an Israeli business that focuses on bringing together publishers and advertising through its intelligent hub, has been one of the great winners. That makes it stand apart in a market where businesses normally serve brands or publications.
Microsoft is a key collaborator of the business as well; Perion is assisting Microsoft in making money off of their Bing search engine.
Perion has been expanding quickly through acquisitions and carving out a niche for itself in premium advertising by providing features like QR scanning, changeable backgrounds, and in-game advertisements during sporting events. The business was on target to increase revenue by 42% in 2021 and 29% in 2022. It makes a profit as much as ACM Research.
Small-cap stocks could have a place in your investment if you are prepared to keep an investment for a number of years and don’t mind a stock’s price moving significantly. Small-cap stocks can increase the overall growth rate of your portfolio if you stick to a buy-and-hold trading approach.
As the pandemic illustrated, tiny firms are more prone to collapse than well-established, huge ones. Before purchasing any small-cap stock, it is crucial to complete the essential research. By making an investment in a small-cap-oriented fund, you can further reduce your risk.