Small-cap stocks are interesting investments because they are often more agile than the prominent blue chips that make up the S&P 500 index.
Many of them don’t have broad name recognition, to be sure, and some may not even be profitable yet. But the best small-cap stocks can sometimes deliver mammoth gains in short order thanks to an ability to capitalize quickly on unique opportunities and put up impressive gains in sales and profits as a result.
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Things can go the other way, too, of course. Big-time stocks may not easily see their share price double or their revenue grow by 50%, but it’s also far less likely they will fall like a rock just because one or two deals fall through or a single earnings report goes awry.
For investors with a greater risk tolerance who aren’t turned off by the potential for volatility, the following companies represent some of the best small-cap stocks to buy in 2024:
*As of Aug. 5 close.
| Small-Cap Stock | Market Value | Sector | Year-to-date Performance* |
| Longboard Pharmaceuticals Inc. (ticker: LBPH) | $1.4 billion | Health care | 467.0% |
| Perimeter Solutions SA (PRM) | $1.4 billion | Materials | 104.6% |
| Gannett Co. Inc. (GCI) | $640 million | Communication services | 75.7% |
| Rush Street Interactive Inc. (RSI) | $2.3 billion | Consumer discretionary | 111.1% |
| Natural Grocers by Vitamin Cottage Inc. (NGVC) | $537 million | Consumer staples | 47.1% |
| SelectQuote Inc. (SLQT) | $562 million | Financials | 141.6% |
| FTAI Infrastructure Inc. (FIP) | $1.0 billion | Industrials | 141.7% |
| NexPoint Residential Trust Inc. (NXRT) | $2.2 billion | Real estate | 27.7% |
| Innodata Inc. (INOD) | $471 million | Technology | 94.6% |
Longboard Pharmaceuticals Inc. (LBPH)
— Market value: $1.4 billion
— Sector: Health care
— YTD return: 467.0%
As a development-stage pharmaceutical company,
there is a lot of risk in Longboard, and the stock remains deeply unprofitable with no significant revenue to speak of. But that’s not uncommon for biotech startups like this. The company is working on a very specific treatment for a rare disease known as developmental epileptic encephalopathy, which causes seizures and motor issues in children, and all of its hopes rest on that drug. The good news for investors is that the stock has been red hot in 2024 after impressive clinical trial results, along with a more recent “breakthrough therapy” designation from the FDA in July. There’s risk, to be sure, but the amazing year-to-date run suggests there are reasons to be excited about what the future holds for LBPH.
Perimeter Solutions SA (PRM)
— Market value: $1.4 billion
— Sector: Materials
— YTD return: 104.6%
You may think it’s a bit odd for a specialty chemicals company to see its stock price more than double across just eight months. But a closer look at Perimeter shows why this stock stands out in its sector. Its unique business includes fire retardant chemicals, and with a record-breaking summer wildfire season, there is tremendous demand for its products. Admittedly, it’s a bit depressing to witness the bleak landscapes left behind as the Park Fire in California recently topped 600 square miles to become one of the four largest wildfires in history. But considering the chronic droughts and related blazes that are now a fixture in the age of global warming
, it’s easy to understand what’s driving PRM.
Gannett Co. Inc. (GCI)
— Market value: $640 million
— Sector: Communication services
— YTD return: 75.7%
Media and marketing giant Gannett is the brand behind the iconic USA Today newspaper as well as a network of about 300 local newspapers nationwide. While print media certainly isn’t what it used to be — as evidenced by the fact that GCI stock is down about 60% in the past five years — there are signs that the company has tightened its belt and is making the most of things in a digital age. Recent earnings reports have been encouraging, and value-oriented investors
who believe in the underlying business have staked out claims in GCI as a result. The future remains uncertain, but Gannett’s momentum in 2024 shows it is among the best small-cap stocks to buy right now.
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Rush Street Interactive Inc. (RSI)
— Market value: $2.3 billion
— Sector: Consumer discretionary
— YTD return: 111.1%
Rush Street is not yet profitable, but it’s growing rapidly thanks to a megatrend of digital gambling across the U.S. The online betting business has been picking up steadily since a 2018 Supreme Court ruling that overturned federal prohibitions on sportsbooks
. What’s more, Rush Street has established operations in markets such as Pennsylvania, New Jersey and Michigan that previously allowed digital casino gaming, and these business lines are also growing rapidly. In fact, its recent Q2 earnings report showed the highest level of revenue growth in more than two years, driving a 34% jump in RSI’s top line. If the economy suffers a pullback, it’s likely we could see online gambling slump, too. However, the bull market and strong consumer numbers lately have converged with a more favorable regulatory environment to cause this small-cap stock to more than double so far in 2024.
Natural Grocers by Vitamin Cottage Inc. (NGVC)
— Market value: $537 million
— Sector: Consumer staples
— YTD return: 47.1%
While the grocery business
has had a tough go of things in 2022 and 2023 thanks to the impact of food inflation, performance has been better this year for select companies — with organic and natural foods player Natural Grocers at the head of the pack. NGVC started the year off with a bang, as its fiscal Q1 earnings showed nearly 8% sales growth overall and a more than 6% gain for same-store sales. That topped estimates and led management to raise its full-year forecast. The bullish sentiment has kept up, as the company continues to provide a unique value proposition that seems to be protecting Natural Grocers from competition by bigger brands — even organics kingpin Whole Foods. NGVC is small, so a modest shift in the market could have a big impact, but right now the momentum is decidedly to the upside.
SelectQuote Inc. (SLQT)
— Market value: $562 million
— Sector: Financials
— YTD return: 141.6%
When you think of the finance sector, you probably don’t think of companies that can surge 100% in a single week or put up revenue growth of more than 60% year over year. Well, that’s just what small-cap stock SelectQuote accomplished a few months ago. This digital insurance broker
is making it easier to shop for everything from Medicare Part D policies to home and auto insurance, and consumers are flocking to its platform in a big way. While not quite profitable as of yet, this high flyer is closing the gap as it grows significantly in scale. And based on the impressive gains so far in 2024, Wall Street is betting that its success will not be short-lived.
FTAI Infrastructure Inc. (FIP)
— Market value: $1.0 billion
— Sector: Industrials
— YTD return: 141.7%
FTAI Infrastructure is a small-cap conglomerate with a diverse array of business lines spanning transportation, energy and industrial products
. That includes operating rail assets such as the Jefferson Terminal in Texas, a deepwater logistics port on the Delaware River, power generation facilities and more. These aren’t particularly sexy businesses, but with a revenue growth rate of about 20% projected for fiscal years 2024 and 2025 alike, Wall Street has bid up this company for good reason. It’s hard to find that kind of growth anywhere, let alone in the industrial sector, making this one of the best small-cap stocks to buy right now. One tip, however: FIP is not to be confused with FTAI Aviation, an airline services and leasing firm with a similar name.
NexPoint Residential Trust Inc. (NXRT)
— Market value: $2.2 billion
— Sector: Real estate
— YTD return: 27.7%
We all know the challenges with affordable housing in the U.S., with many people unable to purchase their own homes and opting to rent instead. NXRT is a small-cap stock capitalizing on this trend, focused on middle-income multifamily properties in large cities and suburban submarkets, primarily in the Southeast and Southwest. In its most recent earnings report on July 30, this real estate firm reported an operating profit, compared with a loss in the prior year, thanks to continued growth in its top line and strong occupancy rates. If the economy hits a snag and renters fall behind on their leases, it could be a much different story for NexPoint in the years ahead. But so far in 2024, this small-cap stock is sitting on roughly 30% gains — and thanks to its structure as a real estate investment trust, or REIT
, it must adhere to rules that require big dividends on top of that. With a current yield of more than 4% in addition to those gains, NXRT is looking strong, even when compared to some larger real estate players.
Innodata Inc. (INOD)
— Market value: $471 million
— Sector: Technology
— YTD return: 94.6%
Founded back in 1988 and previously operating as a small and relatively straightforward IT services company, Innodata has reinvented itself over the past few years as a data mining and artificial intelligence player
. And in 2024, some bigger players have started to sit up and take notice of Innodata, both as a serious competitor and, in some cases, as a serious acquisition target. Wall Street expects INOD revenue to increase at an average of roughly 30% annually from 2023 to 2026, and shares are up about 1,300% in the past five years as a result of this optimism. With any high-octane stock there’s risk of volatility, and in a disruptive corner of tech like AI there is sure to be plenty of drama as many firms race forward but only a select few succeed. Still, it’s hard to argue against the amazing results we’ve seen so far from INOD — making it a high-risk but potentially high-reward small-cap stock.
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9 Best Small-Cap Stocks to Buy in 2024 originally appeared on usnews.com
Update 08/06/24: This story was published at an earlier date and has been updated with new information.
