In this article, we will take a look at some of the best small-cap financial stocks that are currently offering attractive upside potential. On June 17, Ph.D. Professor of Economics at the University of Chile, Alejandro Micco Aguayo, shared his views on artificial intelligence-driven technological advancements in the International Banker publication. He highlighted that such developments are increasingly transforming the financial services industry as institutions are now investing heavily in software, automation, and digital infrastructure.
The integration of AI has not only changed the operating environment of financial institutions but is also reshaping how financial services are delivered and organized. These increased investments in technology reflect the accelerated efforts by financial institutions to modernize operations and strengthen competitiveness across financial markets, while also improving firms’ productivity and efficiency.
While financial institutions are adapting to changing market conditions, they also have to strike a balance between innovation and evolving regulatory and operational requirements. With these rapid changes, new roles have emerged in areas such as cybersecurity, oversight, and model governance.
The sector is also witnessing a growing emphasis on risk management and accountability, as firms seek to maintain efficiency while preserving transparency and trust. At the same time, strong governance and regulatory frameworks continue to support customer confidence and market stability.
With that background, let’s explore our 10 Best Small-Cap Financial Stocks to Buy Now.
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Our Methodology
To identify relevant stocks for this article, we screened U.S.-listed financial companies with market capitalizations between $300 million and $2 billion. Also, we only shortlisted stocks with at least 40% upside potential, according to consensus, as of the June 18 close. Finally, we selected 10 stocks with the highest upside and ranked them in ascending order.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 599.2% since May 2014, beating its benchmark by 372 percentage points (see more details here).
10. Onity Group Inc. (NYSE:ONIT)
Recent analyst ratings are driving a favorable stance towards Onity Group Inc. (NYSE:ONIT), making it one of the 10 best small-cap financial stocks to buy now. On June 16, BTIG decreased the price target for the stock from $60 to $50, while reiterating a Buy rating.
According to the firm, the interest rate environment in 2026 has proven more difficult than previously anticipated, which underscores the need to maintain a well-balanced business model capable of generating steady returns throughout the economic cycle.
BTIG also highlighted that despite the currently elevated mortgage rates, it maintains a favorable view of mortgage originators based on their existing valuations. Nevertheless, the firm reduced its price targets due to tougher prospects, relating to interest rates and overall profitability.
Earlier, on June 11, Texas Capital also assigned a Buy rating to Onity Group Inc. (NYSE:ONIT) after initiating coverage of the stock. The firm set a target price of $49, which yields more than 29% upside potential at the current level.
According to the firm, Onity is a premier mortgage servicing and origination business that has successfully driven positive structural transformation during the past few years. The firm anticipates valuation reaching 1.0x book value of $75, driven by profitable mortgage origination and servicing growth, while noting M&A activity as a potential price catalyst.
Onity Group Inc. (NYSE:ONIT) provides owned mortgage servicing, government-insured and non-agency mortgage loans, as well as residential forward mortgage solutions. The company is also engaged in the origination of conventional and reverse mortgage loans through various channels, such as brokers and retail avenues. It is also involved in reinsurance services.
9. Perella Weinberg Partners (NASDAQ:PWP)
Perella Weinberg Partners (NASDAQ:PWP) is one of the 10 best small-cap financial stocks to buy now. On June 12, Goldman Sachs reduced its target price on Perella Weinberg Partners (NASDAQ:PWP) from $18 to $16 and reiterated its Sell rating on the stock. However, the broader consensus sentiment remains moderately bullish. This, along with workforce-related expense reduction plans, has led to some level of optimism.
As of June 18 closing, the stock had been assigned 2 Buy ratings and 1 Sell rating by analysts. Based on a median 1-year price target of $23.17, it offers an upside potential of almost 45%.
Back on May 28, Dani Burger from Bloomberg reported that Perella Weinberg Partners (NASDAQ:PWP) is initiating a workforce reduction plan, which will lead to a nearly 10% reduction in its existing workforce, which currently comprises approximately 700 individuals. The plan would also include laying off roughly a dozen partners.
Burger noted that these layoffs will be concentrated across certain industry verticals that have recently performed poorly relative to the broader market trajectory.
Perella Weinberg Partners (NASDAQ:PWP) is an independent advisory firm that serves healthcare, industrials, consumer, energy, finance, and tech industries. It delivers strategic advisory services on various types of mandates, including mergers & acquisitions, restructuring, private capital placements, and financing.
8. Slide Insurance Holdings Inc. (NASDAQ:SLDE)
Slide Insurance Holdings Inc. (NASDAQ:SLDE) is one of the 10 best small-cap financial stocks to buy now.
On June 4, Slide Insurance Holdings Inc. (NASDAQ:SLDE) announced the successful placement of its 2026-2027 reinsurance program, setting a record-breaking aggregate limit of almost $5.5 billion. This represents a tremendous 65% increase over the $3.3 billion structure from the previous year, with a first-event coverage expansion to almost $4 billion.
The tech-enabled insurer increased its Purple Re catastrophe bond to $780 million and onboarded 12 additional markets in order to support this expansion and diversify its funding sources. Additionally, the company has enforced strict financial parameters by limiting first-event exposure to just 25% of anticipated pre-tax earnings. This translates to maximum retentions of $166.8 million for a first event and $150 million for a second event.
All participating partners carry an AM Best rating of ‘A-’ or higher, or are fully collateralized, with the firm’s Slide Re unit also taking a selective stake. According to CEO Bruce Lucas, favorable terms, expanded capacity, and the enduring benefits of Florida’s 2022 legislative reforms have profoundly reinforced the company’s financial stability as it navigates the impending peak hurricane season.
Slide Insurance Holdings Inc. (NASDAQ:SLDE) is a tech-enabled insurance company that leverages big data and AI capabilities to offer personalized insurance solutions to customers. Keeping the unique needs and circumstances of individuals in mind, they deliver insurance plans for homeowners, commercial residential properties, and condominiums.
7. UP Fintech Holding Ltd. (NASDAQ:TIGR)
Backed by analyst ratings and the price target estimates, UP Fintech Holding Ltd. (NASDAQ:TIGR) makes it to the list of 10 best small-cap financial stocks to buy now.
On June 3, the price target on UP Fintech Holding Ltd. (NASDAQ:TIGR) was reduced from $16.80 to $7.10 by Citi. The firm maintained a Buy rating on the stock, which still offers more than 50% upside potential based on the revised target.
Citi attributed this adjustment to weak first-quarter results reported by the company. Despite this, the firm believes that the stock’s recent decline appears to be an overreaction to China’s stricter regulations.
On June 1, Bank of America Securities reduced its price target on UP Fintech Holding Ltd. (NASDAQ:TIGR) from $12.40 to $9.96, resulting in an adjusted upside potential of almost 112%. The firm upheld a Buy rating on the stock.
BofA slashed its 2026 GAAP EPS forecast by 45%, and also reduced its 2027–2028 projections by 9% to 13%. These changes account for a regulatory penalty of 411 million RMB, which is anticipated to be recognized during the first quarter. Additionally, the firm has incorporated stricter regulations within mainland China, which have affected profitability for that particular segment. Finally, BofA has taken the updated Federal Reserve interest rate expectations into account as well.
UP Fintech Holding Ltd. (NASDAQ:TIGR) delivers online brokerage services focusing on Chinese investors. The company owns a brokerage platform known as Tiger Trade, and also offers other solutions, including Wealth & Asset Management. It also provides value-added services, including investor education, margin financing, ESOP management, IPO underwriting, and IR/PR platform services.
6. Hippo Holdings Inc. (NYSE:HIPO)
Hippo Holdings Inc. (NYSE:HIPO) is one of the 10 best small-cap financial stocks to buy now. The stock carries a moderately bullish consensus sentiment, based on favorable analyst ratings lately. On June 10, Texas Capital assigned a Buy rating to Hippo Holdings Inc. (NYSE:HIPO), after initiating coverage of the stock. The firm estimated a price target of $43, which yields a potential upside of around 72%.
According to the firm, Hippo operates within the home and casualty insurance segment, with solid distribution allies in the home insurance market. According to the firm, new homeowners are drawn to its unique data and smart-home loss-mitigation technology. Texas Capital argues that the market undervalues Hippo’s fronting carrier.
On June 11, Hippo Holdings Inc. (NYSE:HIPO) shared that Laura Boettcher has been promoted as the new Chief Operating Officer of the company. Boettcher will manage operations for the entire enterprise, following her stint as the COO of Hippo Insurance since February 2024.
In her new role, she is expected to instill operational competence and customer orientation across the broader organization. As the COO of Hippo Insurance, she had a reputation for balancing business objectives with consumer needs. Previously, she also served as the Director of Reinsurance and Chief of Staff to the CEO.
Hippo Holdings Inc. (NYSE:HIPO) provides a multi-carrier platform to deliver regulatory licenses, admitted and non-admitted paper, and reinsurance services. The company also offers program-specific and corporate catastrophe reinsurance solutions, renters’ insurance, and liability coverage solutions. Other services in its portfolio include homeowners’ insurance and niche commercial products.
While we acknowledge the potential of HIPO to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than HIPO and that has 100x upside potential, check out our report about the cheapest AI stock.
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