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Cory MitchellCMT, Investment Expert Writer
Cory has been a professional trader for two decades. In addition to trading and investing he's widely published and coaches individual clients on the finer points of gaining an edge in the market.
Cory MitchellCMT, Investment Expert Writer
Cory has been a professional trader for two decades. In addition to trading and investing he's widely published and coaches individual clients on the finer points of gaining an edge in the market.
CMT, Investment Expert Writer
Michael AdamsLead Editor, Investing
Michael Adams is lead editor, investing at Forbes Advisor. He's researched, written about and practiced investing for nearly two decades. As a writer, Michael has covered everything from stocks to cryptocurrency and ETFs for many of the world's major financial publications, including Kiplinger, U.S. News and World Report, The Motley Fool and more. Michael holds a master’s degree in philosophy from The New School for Social Research and an additional master's degree in Asian classics from St. John’s College.
Reviewed
Michael AdamsLead Editor, Investing
Michael Adams is lead editor, investing at Forbes Advisor. He's researched, written about and practiced investing for nearly two decades. As a writer, Michael has covered everything from stocks to cryptocurrency and ETFs for many of the world's major financial publications, including Kiplinger, U.S. News and World Report, The Motley Fool and more. Michael holds a master’s degree in philosophy from The New School for Social Research and an additional master's degree in Asian classics from St. John’s College.
Lead Editor, Investing
Reviewed
Updated: Apr 2, 2024, 11:29am
Editorial Note: We earn a commission from partner links on Forbes Advisor. Commissions do not affect our editors' opinions or evaluations.
Small-cap stocks are usually considered to be stocks with market capitalizations somewhere between $250 million and $2.5 billion. They are the world’s potential up-and-coming companies.
Of course, most companies start out as small-caps, but by continually growing their earnings, their share prices appreciate. This can increase the market capitalization (share price times shares outstanding) of the company to large, or even mega-sized, while investors along for the ride reap the profits.
Big names like Microsoft, Appleand Amazon were all small-caps at one point. But not all small-caps flourish like those giants have. Many fail or stop growing, which means losses or little profit for investors. Great companies reveal themselves over time by continually producing quality earnings and sales growth.
To navigate the landscape of smaller, more speculative companies, Forbes Advisor has identified 10 of the best small-cap stocks that are growing earnings, are expected to keep doing so, are financially healthy and in some cases are trading at an extraordinary value.
Read more
Show Summary
- Best Small-Cap Stocks of April 2024
- ACM Research, Inc. (ACMR)
- Titan Machinery Inc. (TITN)
- Stride, Inc. (LRN)
- Digi International Inc. (DGII)
- The Bancorp, Inc. (TBBK)
- Hess Midstream LP (HESM)
- Sterling Infrastructure, Inc. (STRL)
- First Financial Bancorp (FFBC)
- OFG Bancorp (OFG)
- NMI Holdings Inc. (NMIH)
- Methodology
Best Small-Cap Stocks of April 2024
Stock (ticker) | Average Yearly Expected EPS Growth (5-Year Avg.) |
---|---|
ACM Research (ACMR) | 42.7% |
Titan Machinery (TITN) | 25.0% |
Stride (LRN) | 20.0% |
Digi International (DGII) | 17.0% |
The Bancorp (TBBK) | 12.0% |
Hess Midstream (HESM) | 11.1% |
Sterling Infrastructure (STRL) | 11.0% |
First Financial Bancorp (FFBC) | 10.0% |
OFG Bancorp (OFG) | 8.0% |
NMI Holdings (NMIH) | 6.7% |
ACM Research, Inc. (ACMR)
5-Year Average EPS Growth Forecast
42.7%
5-Year Average Yearly Sales Growth
45.5%
Forward P/E
16.2
42.7%
45.5%
16.2
Why We Picked It
ACM Research produces cleaning equipment for the semiconductor industry. The company’s products remove impurities and particles from microchips. The company also offers other equipment that is used in various semiconductor processes.
ACMR is one of the fastest-growing small-cap stocks. Earnings have increased an average of 67.8% per year over the last five years. EPS is expected to grow 6.0% this year and 13.6% next year.
The forward price/earnings ratio is attractive. The P/E ratio for this company has rarely dropped below 15 in the last five years.
The company has a “C” financial health rating from Morningstar. A “C” rating indicates a moderately financially stable company, but less so than an “A” or “B” grade. “D” grades represent possible leverage, debt or cash flow issues.
The stock has outpaced the S&P 500 by an average of 8.6 percentage points per year over the last five years. This means, for example, that while the S&P 500 average yearly return is just over 11% for the last five years, ACMR has averaged close to 19% returns per year. That said, it is trading significantly below its 52-week high after tumbling in 2022.
Titan Machinery Inc. (TITN)
5-Year Average EPS Growth Forecast
25.0%
5-Year Average Yearly Sales Growth
14.5%
Forward P/E
6.9
25.0%
14.5%
6.9
Why We Picked It
Titan Machinery operates construction and agricultural equipment stores. It has more than 100 locations in the United States and Europe.
Titan Machinery has averaged 69.5% per year EPS growth over the last five years. That’s the highest on this list. Analysts forecast EPS to grow 8.4% this year, decline 6.3% next year but still average significant yearly growth over the next five years.
The forward P/E ratio is forecast to be near its lowest reading in the past five years, which could create a relatively low-cost window for buying TITN. The company has a “C” financial health rating from Morningstar.
TITN has been a strong performer, outpacing the S&P 500 by an average of 4.7 percentage points per year over the last five years. The share price is currently well below its 52-week high.
Stride, Inc. (LRN)
5-Year Average EPS Growth Forecast
20.0%
5-Year Average Yearly Sales Growth
14.2%
Forward P/E
13.1
20.0%
14.2%
13.1
Why We Picked It
Stride is an online educational company providing alternatives to traditional in-class schooling. It offers kindergarten through grade 12 curriculums. The company has agreements with school districts around the U.S., as its content aligns with state and national standards.
Stride has averaged 30.8% per year EPS growth over the last five years. Analysts forecast EPS to grow 12.3% this year and 9.2% next year.
The forward P/E ratio is attractive, and it is one of the lowest readings in recent years. The company has a “C” financial health rating from Morningstar.
Stride stock has performed well in the past, outpacing the S&P 500 by an average of 7.5 percentage points per year over the last five years. The stock is below its 52-week high.
Digi International Inc. (DGII)
5-Year Average EPS Growth Forecast
17.0%
5-Year Average Yearly Sales Growth
11.4%
Forward P/E
13.7
17.0%
11.4%
13.7
Why We Picked It
Digi International is a technology company focusing on wireless communication and devices. It has more than 160 patents on products and 15 global offices.
The company has seen exceptional growth in recent years, which analysts expect to continue. EPS is predicted to grow 16.9% this year and 16.5% next year. DGII has grown EPS by an average of 60.6% per year over the last five years.
This high-growth stock rarely trades cheaply, so its current forward P/E ratio indicates a decent value. The company has a “B” financial health rating from Morningstar, one of the few “Bs” on this list.
DGII stock has performed well, outperforming the S&P 500 by an annual average of 9.9 percentage points over the last five years. The stock is below its 52-week high.
The Bancorp, Inc. (TBBK)
5-Year Average EPS Growth Forecast
12.0%
5-Year Average Yearly Sales Growth
10.7%
Forward P/E
6.4
12.0%
10.7%
6.4
Why We Picked It
The Bancorp is a financial company providing debit and prepaid card services, institutional banking, commercial lending and commercial real estate bridge lending.
The stock has been trending higher since mid-2022 possibly because analysts are expecting a 60.4% jump in EPS this year, followed by 14.3% EPS growth next year. The company has grown impressively over the last five years, averaging 61.6% yearly EPS increases.
The forward P/E indicates a good value for this stock. Other than 2022, TBBK P/E values have not traded this low very often in the last few years.
The company has a “C” financial health rating from Morningstar and is near a fresh 52-week high. The stock is one of the best-performing stocks on this list, outperforming the S&P 500 by 19.8 percentage points per year over the last half-decade.
Hess Midstream LP (HESM)
5-Year Average EPS Growth Forecast
11.1%
5-Year Average Yearly Sales Growth
14.7%
Forward P/E
11.6
11.1%
14.7%
11.6
Why We Picked It
Hess Midstream provides oil and gas midstream services such as gathering, processing and storage, terminaling and export of these products for third-parties and Hess (HES).
An attractive quality of HESM is the company’s 7.5% dividend yield.
Growing earnings may allow the hefty dividend to continue, as analysts expect 6.5% EPS growth this year and a 17.3% increase next year. Earnings grew 11.2% per year over the last five years.
The company has a “C” financial health rating and is trading below its 52-week high. P/E values near 15 or below generally provide a good value for this stock, which is around where the stock is at right now.
This stock has beaten the S&P 500 by an average of 3.4 percentage points per year over the last five years.
Sterling Infrastructure, Inc. (STRL)
5-Year Average EPS Growth Forecast
11.0%
5-Year Average Yearly Sales Growth
13.7%
Forward P/E
18.8
11.0%
13.7%
18.8
Why We Picked It
Sterling Infrastructure specializes in civil infrastructure construction and rehabilitation, residential construction and transportation infrastructure solutions.
Sterling is the best-performing stock on this list over the last five years, outperforming the S&P 500 by 24 percentage points per year.
During this period, the company grew EPS by 33.1% per year. Going forward, analysts expect positive EPS growth each year over the next five years, including 1.1% growth this year and 16.8% next year.
P/E values have ranged between 4.9 and 25.5 over the last five years, and the company’s current P/E is inline with that. The current valuation is on the higher end but more attractive when looking at forward P/E.
The company has a “B” financial health rating, and it is trading near a fresh 52-week high.
First Financial Bancorp (FFBC)
5-Year Average EPS Growth Forecast
10.0%
5-Year Average Yearly Sales Growth
6.7%
Forward P/E
9.5
10.0%
6.7%
9.5
Why We Picked It
First Financial Bancorp is a regional bank operating in Illinois, Indiana, Kentucky and Ohio. It provides traditional services such as retail banking, lending, wealth management and commercial finance.
FFBC is expected to grow earnings over the next five years, but it may not be a smooth ride. Earnings are expected to jump 18.7% this year and then fall 15.0% next year. The company has averaged 9.8% yearly EPS growth over the prior five years.
The P/E and forward P/E indicate a decent value for this stock, with P/E values spending much of their time between seven and 15 over the last five years.
The company has a “C” financial health rating and pays a 4.0% dividend. The stock is trading below its 52-week high. Historically it has not performed well versus the S&P 500, underperforming by an average of 13.4 percentage points per year.
OFG Bancorp (OFG)
5-Year Average EPS Growth Forecast
8.0%
5-Year Average Yearly Sales Growth
12.0%
Forward P/E
9.0
8.0%
12.0%
9.0
Why We Picked It
OFG Bancorp provides banking, lending and wealth management services in Puerto Rico and the U.S. Virgin Islands.
OFG has one of the smallest expected yearly growth rates on this list over the next five years. Analysts expect 8.7% in the current year and -0.5% next year. OFG has grown earnings by an average of 30.5% per year over the last five years.
The stock has a “C” financial health rating. However, the forward P/E is quite attractive for this stock. P/E values have ranged between 6.2 and 40.5 over the last five years. So, the stock is trading near bargain levels, even while its share price is approaching a fresh 52-week high.
OFG has outperformed the S&P 500 by five percentage points per year over the last five years and pays a 2.6% dividend.
NMI Holdings Inc. (NMIH)
5-Year Average EPS Growth Forecast
6.7%
5-Year Average Yearly Sales Growth
14.9%
Forward P/E
7.0
6.7%
14.9%
7.0
Why We Picked It
NMIH is a mortgage insurer that helps lenders manage their risk against default from low-down-payment borrowers.
The company is expected to grow earnings each year over the next five years, including 2.7% forecasted growth this year and 12.6% next year. It has averaged 32.1% yearly EPS growth over the prior five years.
Since 2021 the P/E has been in a tight range between about six and 10, indicating the current forward P/E is a fair value for the stock.
The company has a “B” financial health rating and is trading at a fresh 52-week high. However, stock performance has been sluggish in the past, underperforming the S&P 500 by 6.1 percentage points per year over the last half-decade.
*All data sourced from TradeThatSwing as of April 2, 2024.
Methodology
This list of best small-cap stocks is based on looking for companies with strong earnings and sales growth in recent years. Analysts must also be forecasting continued growth into the future. In addition, we weeded out companies with erratic earnings or that are issuing shares excessively, which dilutes earnings and shareholders’ equity.
All stocks trade on U.S. exchanges, have a share price above $2, a market cap between $250 million and $2.5 billion and have three-month average daily volume of at least 200,000 shares.
- Expected EPS growth. Companies are only included if analysts predict at least 7.0% yearly average growth over the next five years. Current-year EPS growth is also expected to be positive (above 0%).
- Recent EPS and sales growth. Earnings and sales have increased an average of at least 7.0% per year over the last five years. Earnings were also higher than the prior year for each of the last three years.
- Profitable. All stocks on this list have had positive earnings for the last three years.
This methodology focuses on companies that are already profitable. While unprofitable companies can see their share prices rise too, profitable and growing companies have already proven they can do it. It is a less speculative way to play this segment of the market, as opposed to hoping a struggling company can eventually turn it around.
Our criteria produced a list of 10 stocks.
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CMT, Investment Expert Writer
Cory has been a professional trader for two decades. In addition to trading and investing he's widely published and coaches individual clients on the finer points of gaining an edge in the market.
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