Small-cap stocks are public companies that have market capitalizations ranging from $300 million to $2 billion. Since the share prices of these companies can be very volatile, some companies in the small-cap universe or in small-cap indexes can have market caps significantly higher than this range at any particular time. Some of the stocks classified as small caps include movie theater chain AMC Entertainment Holdings Inc. (AMC), printing and imaging company Eastman Kodak Co. (KODK), and retail drug store chain Rite Aid Corp. (RAD).
Small-cap stocks, as represented by the Russell 2000 Index, have significantly outperformed the broader market, providing investors with a total return of 93.9% compared to the Russell 1000’s total return of 57.7% over the past 12 months. These market performance numbers and the statistics in the tables below are as of March 26, 2021, except for figures related to SM Energy, which are as of March 29, 2021.
Here are the top three small-cap stocks with the best value, the fastest growth, and the most momentum. The valuations of some of the companies listed below have soared way above $2 billion due to recent surges in the stock market. But it’s unclear whether these companies’ valuations will stay at those levels, so they are still members of the Russell 2000 and are thus included.
These are the small-cap stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows you’re paying less for each dollar of profit generated.
| Best Value Small-Cap Stocks | |||
|---|---|---|---|
| Price ($) | Market Cap ($B) | 12-Month Trailing P/E Ratio | |
| VirnetX Holding Corp. ( VHC) |
5.40 | 0.4 | 1.4 |
| Cannae Holdings Inc. ( CNNE) |
39.67 | 3.6 | 1.9 |
| Unisys Corp. ( UIS) |
25.89 | 1.7 | 2.2 |
Source: YCharts
- VirnetX Holding Corp.: VirnetX, through its subsidiaries, develops software to facilitate real-time communications online. This includes voice over internet protocol, encryption, file transfer, streaming, and similar services.
- Cannae Holdings Inc.: Cannae Holdings is a diversified holding company that invests in companies across multiple industries, including restaurants, healthcare, and financial services. On March 25, the company announced that stockholders of Foley Trasimene Acquisition Corp. II (BFT), a special purpose acquisition company, had voted to combine with Paysafe Group Holdings Ltd. Cannae is an investor in the merger.
- Unisys Corp.: Unisys is an information technology consulting company. It provides data analytics, mobility, security, network, and outsourcing services to the commercial, financial services, and government sectors. Unisys announced in late February that it had received major contracts to provide core solutions to multiple new clients, including an unnamed U.S. state government.
These are the top small-cap stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly year-over-year (YOY) percentage revenue growth and their most recent quarterly YOY earnings-per-share (EPS) growth. Both sales and earnings are critical factors in the success of a company. Therefore ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one or the other figure unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of over 2,500% were excluded as outliers.
| Fastest Growing Small-Cap Stocks | ||||
|---|---|---|---|---|
| Price ($) | Market Cap ($B) | EPS Growth (%) | Revenue Growth (%) | |
| B. Riley Financial Inc. ( RILY) |
54.46 | 1.5 | 1,010 | 148.3 |
| Retractable Technologies Inc. ( RVP) |
11.58 | 0.4 | 1,000 | 132.7 |
| YETI Holdings Inc. ( YETI) |
72.44 | 6.3 | 1,320 | 26.3 |
Source: YCharts
- B. Riley Financial Inc.: B. Riley Financial is a diversified financial services company. Its services include investment banking corporate finance research, trading, and sales, as well as wealth management. B. Riley recently completed a merger with National Holdings Corp. Through the transaction, National became a wholly owned subsidiary of B. Riley Financial. The merger adds roughly 700 representatives and about $20 billion in assets to B. Riley.
- Retractable Technologies Inc.: Retractable Technologies designs and manufactures safety needle devices used by the healthcare industry. Its VanishPoint products are designed to prevent needlestick injuries and to prevent reuse to avoid contamination.
- YETI Holdings Inc.: YETI Holdings is a holding company which, through subsidiaries, designs and makes outdoor and recreation products. The company sells seat cushions, coolers, travel bags, apparel, gear cases, and similar products.
These are the small-cap stocks that had the highest total return over the last 12 months.
| Small-Cap Stocks with the Most Momentum | |||
|---|---|---|---|
| Price ($) | Market Cap ($B) | 12-Month Trailing Total Return (%) | |
| GameStop Corp. ( GME) |
181.00 | 12.7 | 4,000 |
| Digital Turbine Inc. ( APPS) |
75.66 | 6.8 | 1,640 |
| SM Energy Co. ( SM) |
$16.78 | $1.9B | 1,300 |
| Russell 1000 | N/A | N/A | 57.7 |
| Russell 2000 | N/A | N/A | 93.9 |
Source: YCharts
- GameStop Corp.: GameStop operates a chain of video game and entertainment software stores. These stores sell video game hardware, software, and accessories and market worldwide. The soaring price of Gamestop and other stocks in January has sparked a federal investigation into market manipulation and other misconduct, with the U.S. Justice Department leading the probe. In late March, the company announced the appointment of Jenna Owens as chief operating officer. Owens began in this position on March 29, 2021.
- Digital Turbine Inc.: Digital Turbine offers an end-to-end mobile services platform that works with mobile operators and third-party publishers to provide services including portal management, content development, and billing.
- SM Energy Co.: SM Energy is an oil and natural gas exploration and production company with operations based in Texas. It reported earnings for its 2020 fiscal year on February. Revenue declined year-over-year and its losses for the year were significantly larger than in 2019, although it achieved positive free cash flow, something it expects to continue in 2021.
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