In this article, we will look at the 10 Best Small Cap Stocks to Buy with Highest Upside Potential.

On July 6, Tom Lee, Fundstrat managing partner, appeared on CNBC’s ‘Squawk Box’ to talk about the latest market trends, his expectations for the S&P 500 this year, and more. He believes that between now and the year-end,  there should be something that feels like a bear market. He does not see this materializing in July, but maybe between August and October.

He was further of the view that June was not a great month, and that there are a lot of fund managers trailing the benchmark this year. Only 23% of fund managers are beating the large-cap growth index, which is the lowest number in almost five years. Lee therefore thinks that there will be a lot of dip buying this month.

READ ALSO: Stocks On The Rise: 10 Best Stocks to Invest In AND 10 Best Oil and Gas Stocks to Buy for the Next Decade. 

Further talking about the conditions of the stock market, he said that this year, the February to April decline felt like a bear market, and that was only 7%. Lee believes that later this year, we have a few things that are bound to test the market. Among these, the first is that the market is going to test the new Fed, because it has a new framework and a new way of looking at inflation. We also know that there is going to be a gradual unlock of the SpaceX shares, and that is a headwind. Lee also thinks that there is going to be a cumulative shortage of petroleum products, which is another headwind. Lastly, he thinks that margin debt is kind of high. This marks four things that might unravel in a way that it feels like a bear market.

With these broader market trends in view, let’s look at the best small cap stocks to buy with the highest upside potential.

Our Methodology

We used the Finviz stock screener to identify the best small-cap stocks with high analyst upside potential. We then selected the top 10 stocks most popular among hedge funds as of Q1 2026, using the hedge fund sentiment data from Insider Monkey’s database. The stocks are arranged in ascending order of analyst upside potential.

Note: All data was recorded on July 8.

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. Insider Monkey’s quarterly newsletter 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 Best Small Cap Stocks to Buy with Highest Upside Potential 

10. Century Communities, Inc. (NYSE:CCS)

Analyst Upside: 23.73%

Century Communities, Inc. (NYSE:CCS) is one of the best small cap stocks to buy with the highest upside potential. Century Communities, Inc. (NYSE:CCS) received a rating update from Zelman on July 7, with the firm downgrading the stock to Underperform from Neutral. For reference, in its financial results for fiscal Q1 2026, Century Communities, Inc. (NYSE:CCS) reported net income of $24.4 million, or $0.84 per diluted share, and an adjusted net income of $25.6 million, or $0.88 per diluted share. Total revenues for the quarter came up to $789.7 million, with a community count of 316, deliveries of 2,013 homes, and net new home contracts of 2,379.

Century Communities, Inc. (NYSE:CCS) further reported that homebuilding gross margin for the quarter was 17.8%, while adjusted homebuilding gross margin came up to 19.7%, which increased by 140 basis points on a sequential basis, benefiting from lower incentives and direct costs. The company also repurchased 617,087 shares of common stock for $40.0 million.

Century Communities, Inc. (NYSE:CCS) is involved in the design, development, construction, marketing, and sale of single-family attached and detached homes. The company’s operations are divided into the following segments: West, Mountain, Texas, Southeast, Century Complete, and Financial Services.

9. The Boston Beer Company, Inc. (NYSE:SAM)

Analyst Upside: 26.99%

The Boston Beer Company, Inc. (NYSE:SAM) is one of the best small cap stocks to buy with the highest upside potential. Goldman Sachs cut the price target on The Boston Beer Company, Inc. (NYSE:SAM) to $169 from $192 on July 8 and reiterated a Sell rating on the shares. For reference, in its financial results for the first quarter ended March 28, 2026, The Boston Beer Company, Inc. (NYSE:SAM) reported that depletions decreased 4% and shipments decreased 6.9%.

Net revenue for the quarter reached $433.9 million, reflecting a decrease of 4.4%, while gross margin reached 49.3%, up 100 basis points year over year. The company further reported that GAAP diluted loss per share for the quarter was $13.88, which includes non-recurring litigation expenses of $15.52 per share, and non-GAAP diluted earnings per share were $1.64. The Boston Beer Company, Inc. (NYSE:SAM) ended the first quarter with $164.1 million in cash and no debt, and repurchased $31 million in shares from December 29, 2025, to April 24, 2026.

The Boston Beer Company, Inc. (NYSE:SAM) is involved in the production and sale of alcoholic beverages. The company’s brands include Truly Hard Seltzer, Twisted Tea, Samuel Adams, Angry Orchard, Sun Cruiser, and Dogfish Head Craft Brewery.

8. Addus HomeCare Corporation (NASDAQ:ADUS)

Analyst Upside: 28.87%

Addus HomeCare Corporation (NASDAQ:ADUS) is one of the best small cap stocks to buy with the highest upside potential. Barclays lifted the price target on Addus HomeCare Corporation (NASDAQ:ADUS) to $96 from $92 on July 8 and maintained an Underweight rating on the shares. The firm adjusted price targets among its U.S. healthcare facilities and managed care coverage ahead of fiscal Q2 earnings from the group.

For reference, in its financial results for the first quarter ended March 31, 2026, Addus HomeCare Corporation (NASDAQ:ADUS) reported that net services revenues for the quarter reached $363.6 million for the quarter, reflecting a 7.7% increase compared with $337.7 million for fiscal Q1 2025. Net income was $25.1 million, compared with $21.2 million for the prior year period, while net income per diluted share was $1.36 compared with $1.16 for the same period a year ago.

Addus HomeCare Corporation (NASDAQ:ADUS) further reported that adjusted EBITDA increased 9.7% to $44.5 million for fiscal Q1 2026 compared to $40.6 million for fiscal Q1 2025.

Addus HomeCare Corporation (NASDAQ:ADUS) provides in-home personal care services. The company’s operations are divided into the following segments: Personal Care, Hospice, and Home Health.

7. Enerpac Tool Group Corp. (NYSE:EPAC)

Analyst Upside: 39.93%

Enerpac Tool Group Corp. (NYSE:EPAC) is one of the best small cap stocks to buy with the highest upside potential. Roth Capital cut the price target on Enerpac Tool Group Corp. (NYSE:EPAC) to $50 from $51 on July 9 and maintained a Buy rating on the shares. The firm told investors in a research note that the company is in the process of successfully executing its strong organic growth strategy, coupled with the strength of the soon-to-be-acquired S.F.E Group business. The firm added that it sees Enerpac as an excellent investment for those looking to benefit from the growing levels of global infrastructure project activity.

In a separate development, on July 8, Enerpac Tool Group Corp. (NYSE:EPAC) announced late Tuesday its decision to acquire Specialized Fabrication Equipment Group from Gladstone Investment Corp. for ~$472M in cash. The company believes that the acquisition will expand its exposure to higher-growth geographies and end markets.

Enerpac Tool Group Corp. (NYSE:EPAC) is involved in the provision of industrial tools, services, technology, and solutions. The company’s operations are divided into the Industrial Tools and Services and Other segments.

6. Zymeworks Inc. (NASDAQ:ZYME)

Analyst Upside: 41.98%

Zymeworks Inc. (NASDAQ:ZYME) is one of the best small cap stocks to buy with the highest upside potential. Truist lifted the price target on Zymeworks Inc. (NASDAQ:ZYME) to $31 from $28 on July 7 and maintained a Buy rating on the shares. The rating update came as part of a broader research note, with the firm updating its models and previewing Q2 earnings in Biotech. Truist told investors in a research note that it is anticipating a rebound from a traditionally softer start to the year, with strength in fiscal Q2 prints for commercial franchises within its coverage. The firm further stated that it sees a robust catalyst calendar, supported by sector optimism and deal activity as drivers for the recent momentum across the sector.

Zymeworks Inc. (NASDAQ:ZYME) also received a rating update from Wells Fargo on June 30. The firm lifted the price target on the stock to $37 from $34 and reaffirmed an Overweight rating on the shares. The firm stated that it views the acquisition of Theravance Biopharma as setting the tone for future royalty portfolio buildout and thinks that the multi-component structure of this deal looks appropriate for a company with internal development capabilities.

Zymeworks Inc. (NASDAQ:ZYME) is a biopharmaceutical company involved in the discovery, development, and commercialization of novel, multifunctional biotherapeutics. Its product includes Zanidatamab, a novel bispecific antibody that targets two distinct domains of the human epidermal growth factor receptor 2 (HER2).

5. Bob’s Discount Furniture, Inc. (NYSE:BOBS)

Analyst Upside: 45.45%

Bob’s Discount Furniture, Inc. (NYSE:BOBS) is one of the best small cap stocks to buy with the highest upside potential. Evercore ISI lifted the price target on Bob’s Discount Furniture, Inc. (NYSE:BOBS) to $18 from $16 and maintained an Outperform rating on the shares. For reference, in its financial results for fiscal Q1 2026, Bob’s Discount Furniture, Inc. (NYSE:BOBS) reported net revenue of $578.1 million, up 8.5% from $532.8 million in fiscal Q1 2025 and driven primarily by new stores and comparable sales growth. The company also opened 5 new stores, ending the quarter with 214 stores in 26 states.

Bob’s Discount Furniture, Inc. (NYSE:BOBS) further reported that the comparable sales growth of 1.2% was driven by increases in conversion and average order value (“AOV”) in both its retail and eCommerce channels. Gross profit rose 8.4% to $256.5 million in fiscal Q1 2026, primarily due to the effects of higher net revenues, while gross margin remained flat at 44.4%. This was attributed to lower freight costs, a favorable product mix shift into the “Better” product category relative to historical levels, and higher protection plan margins.

Bob’s Discount Furniture, Inc. (NYSE:BOBS) is a holding company involved in the retail of home furnishings. The company’s offerings include storage ottomans, reclining sofas, rugs, storage television stands, swivel chairs, and more. Its store locations include New England, New York, the Mid-Atlantic, the Midwest, and the West.

4. Six Flags Entertainment Corporation (NYSE:FUN)

Analyst Upside: 51.11%

Six Flags Entertainment Corporation (NYSE:FUN) is one of the best small cap stocks to buy with the highest upside potential. Six Flags Entertainment Corporation (NYSE:FUN) received a rating update from Northcoast on July 8, with the firm initiating coverage of the stock with a Neutral rating. For reference, in its financial results for fiscal Q1 2026, Six Flags Entertainment Corporation (NYSE:FUN) reported net revenues of $225.6 million, up 12% compared to fiscal Q1 2025. Attendance increased 4% to 2.9 million visits in the quarter, while per capita spending rose 6% to $69.26, reflecting improved ticket mix, effective ticket pricing initiatives, and higher guest spending on food and beverage.

Net loss attributable to the company totaled $269 million in fiscal Q1 2026, as compared to a loss of $220 million. Six Flags Entertainment Corporation (NYSE:FUN) further reported that adjusted EBITDA loss for the quarter was $123 million, a $48 million improvement from $171 million. Operating days in fiscal Q1 2026 totaled 369, reflecting a decrease from 393 operating days in the prior year period.

Six Flags Entertainment Corporation (NYSE:FUN) is a regional amusement resort operator with a number of amusement parks, resort properties, and water parks across 17 US states, Mexico, and Canada. Its parks offer a range of leisure experiences, including themed rides, coasters, resorts, and intellectual property such as Looney Tunes, DC Comics, and PEANUTS.

3. McGraw Hill, Inc. (NYSE:MH)

Analyst Upside: 79.46%

McGraw Hill, Inc. (NYSE:MH) is one of the best small cap stocks to buy with the highest upside potential. On July 6, BMO Capital cut the price target on McGraw Hill, Inc. (NYSE:MH) to $16 from $19 while maintaining an Outperform rating on the shares. The firm told investors in a research note that the company has gained market share in recent years, as it is helping the industry migrate from print to digital modalities. However, it also added that its top-line growth expectations are slightly subdued owing to lengthening purchase cycles.

McGraw Hill, Inc. (NYSE:MH) also received a rating update from Goldman Sachs on June 11. The firm cut the price target on the stock to $17 from $19 but reaffirmed a Buy rating on the shares, telling investors in a research note that the company delivered solid fiscal Q4 results, with revenue, EBITDA margins, and EPS outperforming the firm’s estimates and consensus. Goldman also added that the company’s newly introduced FY27 EBITDA guidance is ahead of the Street, partially offset by a modest revenue guidance shortfall that reflects timing rather than demand.

McGraw Hill, Inc. (NYSE:MH) is a holding company involved in the provision of content and digital education solutions. The company’s operations are divided into the following segments: K-12, Higher Education, Global Professional, and International.

2. HawkEye 360, Inc. (NYSE:HAWK)

Analyst Upside: 107.58%

HawkEye 360, Inc. (NYSE:HAWK) is one of the best small cap stocks to buy with the highest upside potential. RBC Capital cut the price target on HawkEye 360, Inc. (NYSE:HAWK) to $33 from $40 on June 23 and maintained an Outperform rating on the shares. The firm told investors in a research note that the company reported results that were in line with the management’s pre-announced metrics, as its international growth of 157% was encouraging, with both new and existing customers driving the growth. The firm further stated that it expects HawkEye 360, Inc. (NYSE:HAWK) to provide an inaugural guide for 2026 with its fiscal Q2 earnings release.

For reference, in its financial results for fiscal Q1 2026, HawkEye 360, Inc. (NYSE:HAWK) reported record revenue of $49.8 million, up 116.5% compared to the prior-year period of $23.0 million. The company also attained record international revenue of $20.9 million, up 156.8% compared to the prior-year period of $8.1 million. In addition, it realised record adjusted EBITDA, a non-GAAP metric, of $7.4 million, up 92.1% compared to the prior-year period of $3.8 million.

HawkEye 360, Inc. (NYSE:HAWK) is involved in the provision of defence technology, with its offerings including maritime intelligence, spectrum monitoring, air defence radar monitoring, GNSS interference detection, and communications mapping.

1. Nuvation Bio Inc. (NYSE:NUVB)

Analyst Upside: 115.25%

Nuvation Bio Inc. (NYSE:NUVB) is one of the best small cap stocks to buy with the highest upside potential. RBC Capital lowered the price target on Nuvation Bio Inc. (NYSE:NUVB) to $19 from $20 on July 7 and reaffirmed an Outperform rating on the shares. The rating update came as part of a broader research note previewing fiscal Q2 earnings in Biotech, with the firm telling investors in the research note that the biotech sector has picked up considerable momentum, with a near-unprecedented two-week move in June relative to the S&P.

This was driven by strong data expanding innovative spaces and perceptions around improving FDA flexibility/stability. The firm further added that with outlooks more concretely definable than other high-volatility spaces, it believes capital could continue to flow in. It also stated that fiscal Q2 earnings are shaping up to be seasonally strong, and with multiple opportunities for beats and the M&A resurgence likely to continue, there is little that would materially derail things.

Nuvation Bio (NYSE:NUVB) is a biopharmaceutical company that develops novel therapeutic and differentiated candidates to tackle the gaps in oncology. The company’s proprietary portfolio includes six novel and mechanistically distinct oncology therapeutic product candidates.

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