Although larger-capitalization companies typically offer the greatest probability of success, for outright upside magnitude, the most potential often lies with small-cap stocks to buy. Let’s use baseball terms to set up the framework.

If you’re at bat, you know that trying to hit for a single offers a greater hit probability (higher average). However, if you do manage to make contact, the rewards will be rather minimal: grabbing first base. On the other hand, you can take some big hacks, which over time yield a lower hitting average. However, should you find the sweet spot, that ball can go sailing.

And that’s what we have with small-cap stocks. Sometimes, the situation calls for hitting for average. Other times, you need to get some runs on the board. Below are seven speculative ideas to get those runs.

Small-Cap Stocks to Buy: REX American Resources (REX)

Thanks to the rumblings in the energy market due to an oil cartel’s surprise production cut, the issue could cynically benefit hydrocarbon specialists. If so, REX American Resources (NYSE:REX) may enjoy significant upside. Focusing on the production and retail of ethanol, distillers grains, and natural gas, REX offers a relevant backdrop. However, investors right now don’t see it that way, with shares down more than 1% since the year’s start.

No matter what, for speculators, REX may rank as one of the underappreciated small-cap stocks to buy. First, the company benefits from a stout balance sheet. Per data from Gurufocus, REX features an Altman Z-Score of 8.3, reflecting high fiscal stability and low bankruptcy risk. Also, REX benefits from a strong three-year revenue growth rate of 30.1%, outpacing 91% of its peers.

Plus, discount-seeking investors should note that REX trades at 1.11 times its book value. In contrast, the sector median stat pings at 1.74 times. Finally, Singular analyst Christopher Sakai pegs REX a buy. The expert anticipates shares hitting $38, implying over 33% upside potential. Thus, it’s worth keeping on your radar for small-cap stocks to buy.

Small-Cap Stocks to Buy: Carriage Services (CSV)

Easily the most predictable business ever, Carriage Services (NYSE:CSV) offers exactly what it sounds like it offers: final arrangements. While not the most popular of topics, the reality is that humans have an expiration date. And so it’s important to factor that into your ultimate financial goals. But perhaps because CSV aligns with an uncomfortable industry, it hasn’t performed that well.

Since the start of the year, CSV lost 1%, which isn’t so bad. However, in the past 365 days, shares tumbled nearly 47%, which rates as pretty darn horrible. Nevertheless, investors interested in small-cap stocks should keep close tabs on them. While it doesn’t offer the greatest stability, Carriage features a stout three-year revenue growth rate of 15.7%. Also, it’s consistently profitable because, well, people keep needing final arrangements.

Also, the market prices CSV at a forward multiple of 12.09. As a discount to projected earnings, Carriage Services ranks better than 78.57% of its peers. Lastly, covering analysts peg CSV as a consensus moderate buy. Their average price target lands at $42.50, implying over 50% upside potential.

Small-Cap Stocks to Buy: Karat Packaging (KRT)

Likely an unknown enterprise to most of you, Karat Packaging (NASDAQ:KRT) nevertheless represents a relevant business. Based in Chino, California, Karat provides high-quality, environmentally friendly, single-use disposable products for the restaurant and food service industry. Fundamentally, as society emerges from the Covid-19 disaster, KRT may rise due to increased demand.

Look at it this way. Back during the worst of the pandemic, at-home entertainment platforms flourished for obvious reasons. Now that the world economy is normalizing, consumers want to pay for experiences – the so-called revenge travel phenomenon. Logically, then, more people will be eating out, which should benefit Karat Packaging. So, KRT deserves consideration among small-cap stocks to buy.

Also, it delivers on the financial front, leveraging a solid balance sheet, excellent revenue growth, and improved margins. Better yet, KRT features a price-earnings-growth (PEG) ratio of 0.25. In contrast, the sector median PEG comes out to 1.38 times. To close out, analysts over the past eight months peg KRT as a buy. The most recent price target assumes $22, implying over 58% upside potential.

Cambium Networks (CMBM)

Headquartered in Rolling Meadows, Illinois, Cambium Networks (NASDAQ:CMBM) is a leading global provider of wireless fabric infrastructure for business and residential broadband and Wi-Fi. Per its website, Cambium collaborates with and serves network operators in education, healthcare, industrial campuses, and municipalities. While a relevant addition to small-cap stocks to buy, CMBM comes with a warning.

And that, my friends, is that CMBM stock is wildly risky. Since the Jan. opener, shares cratered nearly 31%. A lot of the volatility came recently, with Cambium losing 11% of market value in the past five sessions. So, you must be ready to catch falling knives. Still, the company surprisingly posts solid stability on the balance sheet. It also sports a net margin of 6.8%, above 65.47% of its rivals.

Notably, CMBM trades at a forward multiple of 12.42. As a discount to projected earnings, Cambium ranks better than 60.43% of the competition. Turning to Wall Street, analysts peg CMBM as a consensus strong buy. Their average price target stands at $28.50, implying nearly 92% upside potential.

Tremor International (TRMR)

Another wildly risky opportunity among small-cap stocks to buy is Tremor International (NASDAQ:TRMR). Based in Israel, Tremor is an advertising technology firm. Per its public profile, the enterprise focuses on digital advertising including video, mobile, native, display technology, and connected TV. Fundamentally, TRMR might benefit in the long run from the desire for cheap entertainment.

Basically, as revenge travel dollars run out, Tremor could get interesting, perhaps as a coping mechanism. However, you should also note that the market thinks I’ve lost the plot. Since the start of the year, TRMR lost nearly 11% of its equity value. And in the past 365 days, it’s down 57%.

On the flip side, the company features a consistently profitable business, if you can believe it. Indeed, its trailing-year net margin comes out to 6.51%, above 66.8% of its peers. Also, while it might be a value trap, TRMR trades at a forward multiple of 7.34, which is conspicuously undervalued. Looking to the Street, analysts peg TRMR as a unanimous strong buy. Moreover, their average price target hits $11, implying over 93% upside potential.

Zynex (ZYXI)

Headquartered in Englewood, Colorado, Zynex (NASDAQ:ZYXI) is a medical device manufacturer that produces and markets electrotherapy devices for use in pain management, physical rehabilitation, neurological diagnosis, and cardiac monitoring. While a compelling opportunity among small-cap stocks to buy, it’s also quite volatile. Since the start of the year, ZYXI slipped nearly 14%.

Fortunately, that’s not the end of the story. Rather, in the trailing one-year period, ZYXI gained 60% of its equity value. In the past five years, it’s up over 274%. Financially, Zynex benefits from a robust balance sheet, particularly its Altman Z-Score of 7.8, which indicates a very low bankruptcy risk.

Operationally, the company prints a three-year revenue growth rate of 49.2%, above 96.1% of its peers. Further, its trailing-year net margin comes out to 10.78%, ranked better than 91.57% of sector players. The one glaring obstacle is that Zynex appears overvalued.

Still, analysts peg ZYXI as a consensus moderate buy. Their average price target comes out to $24, implying over 100% upside potential.

VAALCO Energy (EGY)

Finally, rounding out this list of small-cap stocks to buy is VAALCO Energy (NYSE:EGY). An enterprise primarily engaged in hydrocarbon exploration, Vaalco features operations in the Etame Marin block off the shores of Gabon. Thanks to the aforementioned surprise oil production cut, EGY should receive a shot at long-term relevance. However, investors so far don’t see it that way, with EGY gaining only half a percent since the Jan. opener.

Further clouding the narrative for Vaalco is that in the past 365 days, EGY hemorrhaged over 45% of equity value. Still, on the plus side, the financials offer a bright spot. On the balance sheet, the company sports a favorable debt-to-equity ratio of 0.19, below the sector median of 0.43. Operationally, Vaalco prints a three-year revenue growth rate of 51.8%, outpacing 93.56% of its peers.

Notably, the market prices EGY at a forward multiple of 2.18, which appears significantly undervalued. To be fair, Gurufocus warns it could be a possible value trap. I’d be inclined to agree wholeheartedly if it weren’t for the underlying energy relevancies.

For the final word, analysts peg EGY as a consensus moderate buy. Their average price target stands at $10.10, implying almost 137% 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.