While most financial advisors direct you toward established, large-capitalization companies because of their relatively safer business profile, small-cap stocks to buy may pack quite a punch for specific investors. For example, if you’re young and have limited funds, smaller and therefore riskier enterprises may yield significant gains. Also, for older investors, small caps offer an opportunity to play catchup.
To be clear, I’m not going to sit here and tell you that small-cap stocks to buy doesn’t have its drawbacks because it obviously does. For one thing, many of these companies tend to be aspirational in nature. Therefore, the threat of total collapse is a real one. Also, they generally feature higher volatility levels, meaning investors should be prepared for a choppy ride. Still, these diminutive players enjoy fiscal stability, undervalued businesses and bullish analyst ratings. If you’re the intrepid type, these are the small-cap stocks to buy.
Small-Cap Stocks to Buy: KVH Industries (KVHI)
Headquartered in Middletown, Rhode Island, KVH Industries (NASDAQ:KVHI) represents a global leader in mobile connectivity, content and value-added services for the maritime industry. As well, it’s also involved in the communications sphere for its military and government clients. Presently, the company carries a market cap of just under $227 million. Since the start of the new year, KVHI gained a very respectable 13%.
Not only that, KVHI stormed to nearly 22% up in the trailing one-year period, making it an intriguing idea among small-cap stocks to buy. On the financial level, KVH Industries may attract the most attention for its strong balance sheet. For example, its cash-to-debt ratio is 35.4 times, above 86.63% of the competition.Also, the market prices KVHI at a trailing multiple of 8.88. As a discount to earnings, KVH ranks better than 82.87% of the field.
Finally, Needham analyst Ryan Koontz pegs KVHI as a buy. As well, the expert forecasts a $13 price target, implying over 14% upside potential.
Small-Cap Stocks to Buy: Immersion (IMMR)
Based in Florida, Immersion (NASDAQ:IMMR) is a developer and licensor of touch feedback technology, also known as haptic technology. To be fair, criticism exists that Immersion may be a patent troll. Setting that aside, it’s one of the most powerful names among small-cap stocks to buy. Since the Jan. opener, IMMR gained a strong 18% of equity value. In the past one-year period, it’s up nearly 64%.
Financially, Immersion also enjoys very respectable statistics. Perhaps most conspicuously, its cash-to-debt ratio comes in at a staggering 308.1 times. This figure outpaces 84.47% of the software industry. Also, its Altman Z-Score is 6.55, indicating very low risk of bankruptcy. Also, investors may note that the market prices IMMR at a forward multiple of 12.41. As a discount to projected earnings, Immersion ranks better than 79.78% of its peers.
Lastly, covering analysts peg IMMR as a consensus moderate buy. Their average price target stands at $11, implying 23% upside potential.
Small-Cap Stocks to Buy: Silicom (SILC)
Based in Israel, Silicom (NASDAQ:SILC) specializes in the design, manufacture and marketing of connectivity solutions for a range of servers and server-based systems. Presently, the company commands a market cap of $252.57 million. While extraordinarily relevant from a fundamental point of view, it hasn’t translated into chart performance this year. Since the January opener, SILC slipped 12%.
However, it’s possible that Silicom represents a diamond in the rough among small-cap stocks to buy. Notably, the company enjoys a stable balance sheet, undergirded by a cash-to-debt ratio of 4.43 times. In contrast, the sector median value sits at 1.25 times. Also, its Altman Z-Score comes in at a favorably lofty 5.93. As well, the market prices SILC at a trailing multiple of 13.87. As a discount to earnings, Silicom ranks better than 62.75% of the competition.
In closing, Needham’s Alex Henderson pegs SILC as a buy. Also, the expert’s price target stands at $58, implying nearly 55% upside potential.
Hudson Technologies (HDSN)
Headquartered in Pearl River, New York, Hudson Technologies (NASDAQ:HDSN) produces products and services that reduce greenhouse gas emissions, increase energy efficiency and promote sustainability. Notably, the company enjoys a vast consumer base, which includes the U.S. military. Currently, Hudson command a market cap of just under $365 million. So far this year, circumstances have been rough, seeing HDSN lose nearly 11%.
However, that’s not the end of the story. In the trailing year, HDSN gained 45%, making it one of the top-performing small-cap stocks to buy. Financially, Hudson enjoys several attractive attributes. Operationally, its three-year revenue growth rate comes in at 22%, beating out 85.52% of sector players. On the bottom line, its net margin pings at nearly 32%, above 96.33% of rivals.
Moreover, the market prices HDSN at a forward multiple of 7.03. As a discount to projected earnings, the company ranks better than 91.67% of the chemicals industry. Turning to Wall Street, analysts peg HDSN as a consensus moderate buy. Their average price target stands at $14, implying over 60% upside potential.
Radiant Logistics (RLGT)
Hailing from Bellevue, Washington, Radiant Logistics (NYSEAMERICAN:RLGT) bills itself as a non-asset-based global transportation and supply chain management company. With social normalization trends accelerating since the worst of the Covid-19 crisis faded, RLGT could become one of the top small-cap stocks to buy. Indeed, since the Jan. opener, shares gained over 26% of equity value.
Moving forward, Radiant Logistics stands on favorable ground. For example, its Altman Z-Score hits 4.8, indicating high fiscal stability and low bankruptcy risk. Operationally, the company enjoys a three-year revenue growth rate of 18.2%, above 81.66% of rivals. Also, its book growth rate during the same period is 15.9%, besting 81.46% of sector players. Further, the market prices RLGT at a trailing multiple of 7.54. As a discount to earnings, Radiant ranks better than 67.26% of the field.
Looking to the Street, analysts peg RLGT as a unanimous strong buy. Their average price target stands at $10.67, implying nearly 63% upside potential.
Build-A-Bear Workshop (BBW)
Operating out of St. Louis, Missouri, Build-A-Bear Workshop (NYSE:BBW) does exactly what the brand suggests: sells teddy bears and other stuffed animals and characters. Per its public profile, customers go through an interactive process in which the stuffed animal of their choice is assembled and tailored to their own preferences during their visit to the store.
Whether BBW ranks as one of the best small-cap stocks to buy represents a matter of debate. However, it’s inarguably the cutest name in the small-cap ecosystem. However, it’s serious business when it comes to the financials. While Build-A-Bear could use improvement in the operational department, the company benefits from a stable balance sheet. In addition, it’s highly profitable with a net margin of 10.25%. Also, the market prices BBW at a forward multiple of 6.72. As a discount to earnings, Build-A-Bear ranks better than 92.16% of the competition.
Finally, Small Cap Consumer Research analyst Eric Beder pegs BBW a buy. The expert’s price target stands at $41, implying over 76% upside potential.
iTeos Therapeutics (ITOS)
Headquartered in Watertown, Massachusetts, iTeos Therapeutics (NASDAQ:ITOS) pioneers the discovery and development of highly differentiated immuno-oncology therapeutics for patients. Although the oncology specialist carries significant scientific relevance, it hasn’t translated in price action. Since the Jan. opener, ITOS gave up almost 27% of equity value. In the trailing year, it’s down nearly 60%.
Although one of the riskiest names among small-cap stocks to buy, iTeos may be worth a look for speculative investors. In particular, the company carries a strong balance sheet, undergirded by a cash-to-debt ratio of 131.21 times. In contrast, the sector median value sits at a comparatively pedestrian 8.43 times.
Additionally, the market prices ITOS at a trailing multiple of 5.33 times. As a discount to earnings, iTeos ranks better than 89.06% of the biotechnology industry. Lastly, analysts peg ITOS as a unanimous strong buy. Their average price target stands at $39.67, implying over 191% upside potential.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.