9 Best Small-Cap Stocks to Buy in 2022

Analysts love these relatively cheap small-cap stocks.

The large-capitalization S&P 500 index is down more than 16% so far in 2022, while the Russell 2000 small-cap index is down roughly 20%. Small-cap stocks have historically outperformed large-cap stocks during periods of economic expansion and dovish monetary policies. Unfortunately, U.S. gross domestic product growth dropped into negative territory in the first quarter, and the Federal Reserve is expected to continue aggressively raising interest rates in coming months. These conditions make small-cap stock selection even more critical. Here are nine of the best small-cap growth stocks to buy in 2022, according to RBC Capital Markets analysts.

Coursera Inc. (ticker: COUR)

Coursera is an online learning platform that offers global users access to courses and degrees from universities and companies. Analyst Rishi Jaluria says Coursera’s multi-segmented business model, which includes targeting consumers, enterprises and higher education institutions, creates a powerful flywheel. In addition, he says Coursera customers and partners give extremely positive feedback on their experiences. Jaluria says the pandemic irreversibly shifted attitudes about education, creating room for many more fully online degree offerings. He says Coursera is positioned to maintain top-tier growth and expand margins over time. RBC has an “outperform” rating and a $50 price target for COUR stock, which had a May 10 closing price of $15.28.

OptimizeRx Corp. (OPRX)

OptimizeRx is a health care technology company that specializes in digital health messaging via electronic health records, helping pharmaceutical companies communicate with health care providers. Analyst Sean Dodge says OptimizeRX has several revenue growth drivers in coming years, including an increased focus on digital spending by pharma companies, deeper integration of OptimizeRX solutions into clients’ commercial planning, a transition to more enterprise-type engagements and cross-selling opportunities within the company’s existing client base. Dodge projects at least 30% compound annual revenue growth for OptimizeRx over the next three years. RBC has an “outperform” rating and a $100 price target for OPRX stock, which closed at $23.89 on May 10.

Global Blood Therapeutics Inc. (GBT)

Global Blood Therapeutics is an early commercial-stage biopharmaceutical company focused on sickle cell disease, or SCD. Analyst Gregory Renza says Global Blood’s Food and Drug Administration-approved sickle hemoglobin polymerization inhibitor Oxbryta could address the needs of SCD patients without requiring donors for hematopoietic stem cell transplants. Renza says Oxbryta has the potential to become the standard of care for SCD based on its long-term efficacy and safety profile, and he says label expansion into children and international geographies could be bullish catalysts for Global Blood. RBC has an “outperform” rating and a $65 price target for GBT stock, which had a closing price of $24.22 on May 10.

Fluence Energy Inc. (FLNC)

Fluence Energy is a leading global energy storage technology and services company. Fluence shares are down more than 70% year to date on market expectations for sharply rising interest rates, but analyst Shelby Tucker says Fluence has potential to generate tremendous value over time from its huge addressable market. Tucker says Fluence has an impressive project backlog, but delays will weigh on margins in the near term. Logistical issues will ease in the second half of 2022, Tucker says, clearing the way for roughly 50% annual revenue growth through 2025. RBC has an “outperform” rating and a $28 price target for FLNC stock, which closed at $8.24 on May 10.

Sunnova Energy International Inc. (NOVA)

Sunnova Energy is a leading U.S. residential solar service provider. Analyst Elvira Scotto says Sunnova currently holds between 4% and 5% of U.S. residential rooftop solar market share, but that share is growing. Sunnova’s dealer model means its dealers originate leads and complete installation of Sunnova systems. Wood Mackenzie estimates U.S. rooftop solar penetration is only about 4%, which creates opportunity for significant long-term growth. Finally, Scotto says the recent extension of the investment tax credit for rooftop solar panels is bullish for Sunnova. RBC has an “outperform” rating and a $40 price target for NOVA stock, which had a May 10 closing price of $15.17.

Sarepta Therapeutics Inc. (SRPT)

Sarepta Therapeutics is a biopharmaceutical company that develops gene therapies to treat Duchenne muscular dystrophy, or DMD, and Limb Girdle muscular dystrophy, or LGMD. Analyst Brian Abrahams says both Sarepta’s DMD and LGMD gene therapy programs have demonstrated robust expression, strong safety data and encouraging functional gains. He says both treatments could be best-in-class therapies for their respective disorders. In addition to its gene therapy programs, Sarepta has a strong balance sheet and FDA-approved drugs Exondys 51, Vyondys 53 and Amondys 45 for treating specific DMD subgroups. RBC has an “outperform” rating and a $145 price target for SRPT stock, which closed at $65.42 on May 10.

Flywire Corp. (FLYW)

Flywire is a global payments-enablement software company. Analyst Daniel Perlin says Flywire is uniquely positioned to address payment “friction points” in the education, health care, travel and other industries. Perlin says growing end markets, market share gains, elevated retention rates, and expansion into new verticals and products should help drive greater than 30% annual revenue growth for Flywire over at least the next three years. He projects Flywire will become profitable in fiscal year 2023 on an earnings before interest, taxes, depreciation and amortization basis. RBC has an “outperform” rating and a $51 price target for FLYW stock, which had a closing price May 10 of $21.14.

Shift4 Payments Inc. (FOUR)

Shift4 Payments is an integrated payment processing and technology solutions company. Perlin says Shift4 offers investors exposure to the secular growth market of digital payments. In addition, he says Shift4 has a compelling mix-shift opportunity in converting its existing gateway-only clients to end-to-end processing clients, which could increase profits by more than 400%. Shift4 also has a unique distribution model through which nearly all of its sales are generated via its software partner network, which leverages the expertise and relationships of more than 7,000 software partners. RBC has an “outperform” rating and an $86 price target for FOUR stock, which closed at $41.02 on May 10.

Goosehead Insurance Inc. (GSHD)

Goosehead Insurance is an innovative personal lines insurance broker. Analyst Mark Dwelle says Goosehead’s fully integrated sales and service platform differentiates the company from independent insurance agents and generates cost and efficiency advantages. Dwelle says Goosehead has a sustainable growth runway ahead and should generate at least 30% annual revenue growth under normalized market conditions for at least the next three years. In addition, pricing leverage and platform expansion should help grow earnings, and he is bullish on Goosehead’s cash flow generation and recurring revenue visibility. RBC has an “outperform” rating and a $140 price target for GSHD stock, which had a closing price on May 10 of $51.35.

These small-cap stocks could keep your portfolio on a growth track:

— Coursera Inc. (COUR)

— OptimizeRx Corp. (OPRX)

— Global Blood Therapeutics Inc. (GBT)

— Fluence Energy Inc. (FLNC)

— Sunnova Energy International Inc. (NOVA)

— Sarepta Therapeutics Inc. (SRPT)

— Flywire Corp. (FLYW)

— Shift4 Payments Inc. (FOUR)

— Goosehead Insurance Inc. (GSHD)

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