Many investors find comfort in large blue-chip stocks with deep pockets and established brands. But while dominant, some mega-cap companies can also be a bit complacent. After all, if you have billions in revenue and millions of customers, simply acting as caretaker to an existing business is sometimes enough for a management team.
Small-cap stocks, on the other hand, often offer more dramatic growth potential. After all, some big-name stocks you know and love famously got their start in a founder’s garage somewhere … and wouldn’t it be nice if you could have gotten in on the first step of that journey?
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This list of the nine best small-cap stocks to buy now offers picks in a variety of sectors that potentially have bright futures ahead of them. There is admittedly more risk in these nascent firms, but if you’re after growth and profit potential, then they’re certainly worth a look.
For the purpose of this article, the best small-cap stocks must be under $2 billion in market value and have recorded a year-to-date return of 30% or better. That’s compared with the 12.7% return for the S&P 500 over the same period.
| Stock | Market cap | Year-to-date return through June 11 |
| Aris Water Solutions Inc. (ticker: ARIS) | $880 million | 80.2% |
| Blue Bird Corp. (BLBD) | $1.9 billion | 107.6% |
| Endeavour Silver Corp. (EXK) | $880 million | 83.2% |
| GigaCloud Technology Inc. (GCT) | $1.3 billion | 80.0% |
| Gran Tierra Energy Inc. (GTE) | $310 million | 75.5% |
| Land’s End Inc. (LE) | $460 million | 47.0% |
| MoneyLion Inc. (ML) | $985 million | 33.1% |
| Orion Group Holdings Inc. (ORN) | $350 million | 108.1% |
| Pennant Group Inc. (PNTG) | $700 million | 66.6% |
Aris Water Solutions Inc. (ARIS)
— Market cap: $880 million
— Sector: Utilities
— YTD return: +80.2%
Aris refers to itself as an “environmental infrastructure and solutions company,” but that’s a glamorous way of saying its a for-profit water utility
. Interestingly enough, however, it does not service water and sewer connections for residents but rather is among the top water providers for the oil and gas industry operating in the Permian Basin of West Texas. The company’s unique specialty helps it keep a steady core of customers that reliably fuels a sweet dividend of 2.8% annually. That’s on top of tremendous share performance lately, based on the generally favorable environment fueled by the health of the Texas oil and gas industry these days, which has caused shares to log returns that are more than six times the S&P 500 thus far in 2024.
Blue Bird Corp. (BLBD)
— Market cap: $1.9 billion
— Sector: Consumer discretionary
— YTD return: +107.6%
While technically in the consumer discretionary
sector, as it is classified as a vehicle manufacturer, it’s not fair to call Blue Bird an automaker. It specializes in the design and sale of school buses for local governments and institutional use, including diesel-powered buses as well as alternative drivetrains, including electric, compressed natural gas and propane. Because of the COVID-19 pandemic, many districts all but shut down their transit acquisitions across 2021 and 2022, as there simply wasn’t the wear-and-tear they expected on their fleet, and it seemed wise to save that cash instead.
Some schools started ramping up spending again in 2023, but many were reluctant to spend if they didn’t have to. Well, now they have to, thanks to the age of their fleets — and spending has been hot and heavy in recent months as school districts play catch-up. Case in point: BLBD reported total sales increased by 15% in the first quarter while net income more than tripled compared to the previous year. Blue Bird raised its full-year guidance as a result, a great sign for the future prospects of this small-cap stock.
Endeavour Silver Corp. (EXK)
— Market cap: $880 million
— Sector: Materials
— YTD return: +83.2%
With silver prices up roughly 20% from the prior year, small mining stocks
hunting for this precious metal have seen serious gains lately. Endeavour also mines for gold to a small extent, which has only added to its performance. Small wonder that the company has seen better numbers lately, thanks to rising precious metals prices. The company is projecting roughly 30% sales growth in fiscal 2024, and earnings are forecast to soar from just 3 cents per share to 16 cents, thanks to expanding margins. Analysts expect a 30% top-line growth rate for fiscal 2025 as well, amid projections of 38 cents in earnings per share. Commodity prices can be volatile, so if we see a rollback in silver then we may also see trouble for EXK. But all forecasts are looking good, meaning this could be a small-cap miner with the wind at its back for the next several months.
GigaCloud Technology Inc. (GCT)
— Market cap: $1.3 billion
— Sector: Technology
— YTD return: +80%
GigaCloud is a technology company
that powers e-commerce and logistics solutions, specializing in “large parcel merchandise” — meaning home appliances, fitness equipment, furniture and other goods that can be very costly and complex to deliver. What’s more, as Amazon.com Inc. (AMZN) continues to dominate categories such as consumer electronics and apparel, it has not quite figured out a way to squeeze out competitors in some of these other categories. GigaCloud is making the most of this opportunity right now, with a massive 60% jump in revenue projected this fiscal year as it continues to rapidly acquire new customers. Furthermore, a 20% top-line growth forecast for 2025 hints there’s more room to run in the years ahead, too.
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Gran Tierra Energy Inc. (GTE)
— Market cap: $310 million
— Sector: Energy
— YTD return: +75.5%
As with aforementioned miner Endeavour, GTE is a commodity-focused small-cap stock that depends on market pricing to determine its profit margins. And thanks to firm prices for fossil fuels lately, the oil and gas exploration
firm has been on a significant uptrend. It’s important to keep in mind that while integrated oil giants don’t see the same immediate uptrend based on energy pricing news, they also don’t carry the same risk of crashing and burning if oil prices cool off. So while GTE has delivered a big-time gain since the beginning of the year, it could also deliver big-time pain and should be held only as an aggressive part of your portfolio.
That said, it’s hard to argue with its performance, as this small-cap stock has swung back to profitability and has nearly doubled from its 52-week lows.
Land’s End Inc. (LE)
— Market cap: $460 million
— Sector: Consumer discretionary
— YTD return: +47%
Land’s End was spun off from Sears in 2014 as a stand-alone apparel firm, and like many parts of the crumbled empire of this once-dominant department store, it has certainly seen better days. But lately LE has been reconnecting with younger customers and rejuvenating its brand, including making inroads with vendors like Amazon to ensure it gets in front of new customers to make them believers. The result is a projected profit in fiscal 2024 after posting a significant loss of $3.92 per share last fiscal year. Revenue growth is still admittedly hard to come by in the crowded apparel marketplace. Simply by streamlining its business it has stopped the bleeding, however, and we’ve seen a massive vote of confidence from Wall Street lately as this small-cap stock looks to re-enter growth mode.
MoneyLion Inc. (ML)
— Market cap: $985 million
— Sector: Technology
— YTD return: +33.1%
Another small-cap stock that is part of a broader “fintech
” revolution, MoneyLion is a New York-based software firm that provides personalized loans, banking products and educational content for American consumers as well as access to cryptocurrency markets. It’s at the center of a megatrend where consumers are looking outside of traditional banks to help take control of their financial future — and unlike some other startups, has found a way to be significantly profitable in short order. Though founded in 2013 and only publicly traded since 2021, ML is now comfortably profitable after moving from a moderate loss to a projection of $1.57 in earnings per share this fiscal year. What’s more, that earnings figure is set to more than double in fiscal 2025. There’s a lot of risk and dynamism in fintech, but this small-cap stock has a strong wind at its back right now based on both financials and near-term performance.
Orion Group Holdings Inc. (ORN)
— Market cap: $350 million
— Sector: Industrial
— YTD return: +108.1%
Orion Group is a specialty marine construction company that performs dredging around and maintenance of pipes, bridges and other structures. Structures it services include everything from cruise
terminals, working ports and piers, buried water and wastewater pipelines, and more. Business is booming these days, with projected 20% growth in fiscal 2024 revenue over the prior year. That favorable sales environment has helped the company move comfortably into profitability, and strong spending from key customers has created an “opportunity pipeline” that is almost four times larger than it was a year ago. With key partners allocating more budget to projects and Orion’s boasting deep expertise in an admittedly niche area of engineering, investors are very bullish on the outlook for this stock for the rest of the year.
Pennant Group Inc. (PNTG)
— Market cap: $700 million
— Sector: Health care
— YTD return: +66.6%
Some of the most popular small-cap stocks in the health care sector
are development-stage biotechnology companies, startups that are burning cash as they chase regulatory approval for potential breakthrough treatments. It’s difficult to research those on your own given the complexities of these new drugs, but one type of company that’s simpler to analyze is a service provider like Pennant. The firm operates home health care, hospice services and senior living facilities mainly in California and the Mountain West. The demographic tailwind lifting its business is substantial, and the company continues to grow at a steady clip — as evidenced by expectations for 16% revenue growth and 21% earnings growth this fiscal year.
If you don’t want to get bogged down in organic chemistry and Food and Drug Administration trials, Pennant is a great small-cap stock with growth potential that’s a bit easier for the everyday investor to understand.
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9 Best Small-Cap Stocks to Buy in 2024 originally appeared on usnews.com
Update 06/12/24: This story was published at an earlier date and has been updated with new information.
