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).
While we acknowledge the potential of ZYME 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 ZYME and that has 100x upside potential, check out our report about the cheapest AI stock.
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