Investors had plenty of cause for concern last year, but the S&P 500 index of the largest U.S. companies finished 2023 up about 26% despite these worries. And now that investors are starting to get some swagger back and there is less concern about inflationary pressures or interest rates, it could be time for “risk-on” trades in small, growth-oriented names to once again return to favor.
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Small-cap stocks can be more aggressive, to be sure, as they are more sensitive to the ups and downs of the broader economy. But as many of these firms are still up-and-coming names with something to prove, there’s also significant upside if things go well.
While small-caps might traditionally be thought of as having market capitalizations between $300 million and $2 billion, it’s been a while since that range has expanded to accommodate the overall growth in the stock market and factors like inflation. For that reason, we take a more liberal definition of small-cap stocks for this piece, including companies that are worth up to $5 billion.
As proof of the potential that this class of company can hold, here are seven high-flying small-cap stocks to watch after their recent performance and impressive growth numbers as of late:
| Stock | Market capitalization | 12-month return |
| ACM Research Inc. (ticker: ACMR) | $1.3 billion | 80.6% |
| Frontline PLC (FRO) | $4.8 billion | 83.5% |
| Huron Consulting Group Inc. (HURN) | $2.0 billion | 49.5% |
| Kura Sushi USA Inc. (KRUS) | $1.0 billion | 60.4% |
| Modine Manufacturing Co. (MOD) | $3.5 billion | 203.4% |
| Uranium Energy Corp. (UEC) | $3.1 billion | 103.6% |
| Urban Outfitters Inc. (URBN) | $3.7 billion | 48.1% |
ACM Research Inc. (ACMR)
— Market capitalization: $1.3 billion
— 12-month return: 80.6%
Mega-cap technology stocks are popular because it’s hard to imagine a world without them. Small but mighty tech firm ACM Research shows that the profit potential isn’t exclusive to just the biggest stocks, however. This specialized semiconductor company is laser-focused on cleaning equipment that enhances the manufacturing process — and thus the profitability and overall yield — for integrated chipmakers worldwide. Most investors know about the supply chain issues and semiconductor shortages in recent years, and ACM is uniquely situated to ensure this industry is operating at full capacity going forward. Thanks to strong demand it’s projecting 38% and 29% revenue growth, respectively, in fiscal year 2024 and fiscal year 2025.
Frontline PLC (FRO)
— Market capitalization: $4.8 billion
— 12-month return: 83.5%
Shipping company Frontline is a provider of seaborne crude oil transportation via its fleet of about 70 total tanker vessels. U.S. crude shipments hit a record in 2023 thanks to strong global demand, and as a result tankers were busy — and able to raise their shipping rates significantly across the year, too. FRO enters 2024 at multiyear highs thanks to these trends, with a generous dividend yield on top of its share performance. Though distributions can be volatile from quarter to quarter and just rolled back from a high of 80 cents last year to just 30 cents in Frontline’s December payday, the annualized yield on that more modest payout is still good for a 5.7% dividend on top of FRO stock returns.
Huron Consulting Group Inc. (HURN)
— Market capitalization: $2.0 billion
— 12-month return: 49.5%
Professional services firm Huron offers consulting mainly for partners in the health care and education fields. This can range from accounting and financial improvements for their operations, along with technology services that include software rollouts, analytics and research. Now that the pandemic-related disruptions of 2020-2021 are behind us and 2022-2023 proved to be better than expected for many businesses, there is the appetite (and budget) at many firms to think strategically about reorganizations and seizing new opportunities. The consultants at HURN have been cashing in on this trend, and analysts expect more than 20% revenue growth when fiscal 2023 numbers are finalized — followed by nearly 10% growth in the year ahead, too.
[READ: 10 Best Cheap Dividend Stocks to Buy Under $20]
Kura Sushi USA Inc. (KRUS)
— Market capitalization: $1.0 billion
— 12-month return: 60.4%
Kura is a fast-growing Japanese restaurant chain that continues to see big success across the U.S. The company is projecting nearly 30% revenue growth for both the current fiscal year as well as the year after that. The big appeal of Kura is its “technology-enabled” approach that brings you sushi and other dishes on a conveyor belt, which is quite literally a photo-friendly approach that has created buzz with diners on social media. This novel appeal both reduces overhead and gives Kura a nice hook, providing interest that has helped buoy sales and support Kura’s rollout of new locations.
Modine Manufacturing Co. (MOD)
— Market capitalization: $3.5 billion
— 12-month return: 203.4%
Modine Manufacturing is a classic small-cap growth story that most investors may overlook. The company isn’t flashy at all; it’s just a modest-sized midwestern industrial stock that specializes in engineered heat transfer systems. It mainly used to produce refrigeration gear in years past, but in a modern economy Modine is increasingly providing components to keep electric vehicle batteries and data center technology cool during operations, as well as efficient heating, ventilation and cooling technology to conserve energy, but keep buildings cool. The specialty gear Modine makes is in high demand, and the fact that the stock as tripled in the last 12 months should give you an indication of how well things are going. But if you need hard numbers, consider fiscal 2024 earnings should surge more than 50% from $1.95 a share to about $3.05 if Wall Street projections hold.
Uranium Energy Corp. (UEC)
— Market capitalization: $3.1 billion
— 12-month return: 103.6%
Uranium Energy, as you may have guessed, is involved in producing uranium. It also pulls other elements out of the ground as it operates, including titanium concentrates, and brings them to market as a byproduct of exploration. Nuclear energy is generally having a renaissance in the age of climate concerns, as it remains a clean alternative to fossil fuels and modern technology has made uranium-powered electricity generation safer than ever before. Though many existing facilities are older, the new Vogtle Electric Generating Plant in Georgia began commercial operation on July 31, 2023, as a sign that nuclear power may be returning to the grid in earnest. This demand coupled with strong uranium prices has caused UEC to double over the last 12 months, and UEC sits near all-time highs as we kick off 2024.
Urban Outfitters Inc. (URBN)
— Market capitalization: $3.7 billion
— 12-month return: 48.1%
Retailer Urban Outfitters has managed to sidestep some of the pain that brick-and-mortar peers have experienced lately thanks to a powerful brand that connects via its roughly 700 locations. As proof, consider that net sales for the two months ending Dec. 31 — effectively, the holiday shopping season — were up 10% over 2022. Furthermore, URBN is the parent of the innovative clothes “rental” marketplace Nuuly. For $98 a month, you can borrow any six items, and for those who want to be on the cutting edge of fashion on a budget, the idea has connected in a big way. URBN stock performed roughly twice as well as the S&P 500 last year, and enters 2024 with strong momentum.
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7 Best Small-Cap Growth Stocks to Buy originally appeared on usnews.com
