In this article, we are going to discuss the 10 most popular small cap stocks to buy.
The Russell 2000 index, which is comprised of America’s top small cap stocks by market cap, has surged by almost 12% since the beginning of 2026. This compares to gains of just under 8.3% posted by the S&P 500 during the period.
Small-cap stock territory is where the leaders of tomorrow are born, as some of the biggest companies in the world today started off small. An example is Nvidia, which went public at $12 per share back in 1999, and was firmly placed in the small-cap group. However, while these stocks can offer impressive growth prospects, they also come with higher risks, volatility, and a strong sensitivity to macroeconomic factors.
That said, small caps represent around 10% of the US market by market cap and are a must-have in any diversified portfolio, since investors who are worried about overexposure to the currently high-priced US market might find some small-cap valuations attractive.
With that said, here are the Best Small Cap Stocks to Buy According to Hedge Funds.
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Our Methodology
To collect data for this article, we referred to screeners to find small cap stocks (with a market cap of between $300 million and $2 billion) with the highest number of hedge investors at the end of Q4 2025, as per the Insider Monkey database. We limited our final selection to companies that have recently reported noteworthy developments likely to impact investor sentiment. The following are the Best Small Cap Stocks to Buy According to Hedge Funds.
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 498.7% since May 2014, beating its benchmark by 303 percentage points (see more details here).
10. Profrac Holding Corp. (NASDAQ:ACDC)
Number of Hedge Fund Holders: 17
Market Cap as of May 19: $1.42 billion
ProFrac Holding Corp. (NASDAQ:ACDC) is a technology-focused energy services company operating in the United States.
On May 19, BofA bumped up its price target on ProFrac Holding Corp. (NASDAQ:ACDC) from $4 to $4.75, but kept its ‘Underperform’ rating on the shares. The target boost, which still reflects a downside of almost 41% from the current levels, comes as the analyst firm updated its oilfield services models for Q1 earnings and 10-Q reports. BofA noted that its forecasts for 2027 and 2028 EBITDA are on average 10% and 16% above consensus, respectively.
ProFrac Holding Corp. (NASDAQ:ACDC) reported a net loss of $81 million in its Q1 2026 report on May 7, up from a net loss of $141 million in the fourth quarter of 2025. However, the company’s EBITDA of $54 million was down by over 11% sequentially. According to ProFrac, the operational disruptions caused by the harsh winter storm earlier this year resulted in an estimated $9.3 million reduction to its consolidated adjusted EBITDA.
9. Getty Realty Corp. (NYSE:GTY)
Number of Hedge Fund Holders: 19
Market Cap as of May 19: $1.99 billion
Getty Realty Corp. (NYSE:GTY) is a publicly traded, net lease REIT specializing in convenience, automotive, and other single-tenant retail real estate.
On May 14, KeyBanc analyst Upal Rana bumped up the firm’s price target on Getty Realty Corp. (NYSE:GTY) from $33 to $36, while maintaining an ‘Overweight’ rating on the shares. The revised target, which reflects an upside of over 8% from the current price level, comes following the company’s Q1 report and recent investor meetings.
KeyBanc believes that Getty Realty Corp. (NYSE:GTY)’s strong financial position, including its over $625 million of liquidity, leverage of 4.2 times, and healthy investment spreads of 150 bps, positions the company well to fund its $125 million pipeline and boost volumes and future earnings growth. Although GTY has already outperformed its peers by 1,070 bps YTD, the analyst firm still views its valuation as attractive, citing a modest 2.9% multiple premium to peers on 2026 AFFO/share and an implied cap rate of 7.7%.
8. Expro Group Holdings N.V. (NYSE:XPRO)
Number of Hedge Fund Holders: 20
Market Cap as of May 19: $1.90 billion
Expro Group Holdings N.V. (NYSE:XPRO) is a global energy services company, delivering innovative, sustainable well solutions with a focus on safety, data, and performance.
Expro Group Holdings N.V. (NYSE:XPRO) received a boost on May 19 when Freedom Broker upgraded the stock from ‘Sell’ to ‘Hold’, while keeping its price target unchanged at $16. The analyst firm cited valuation considerations for the upgrade, but noted that the company’s share repurchase strategy “raises questions”.
Expro Group Holdings N.V. (NYSE:XPRO) reported better-than-expected results for its Q1 2026 on May 5, with the company beating estimates in both profits and revenue. The firm also announced that it had entered into a definitive agreement to acquire Enhanced Well Technologies in a deal worth approximately $215 million. The acquisition will be immediately accretive to cash flows and EBITDA margins, and it adds over $275 million of order backlog to the company’s portfolio.
Expro Group Holdings N.V. (NYSE:XPRO) reaffirmed its guidance for full-year 2026. The company also sees a $10 million to $15 million revenue impact from the Middle East conflict in the second quarter.
7. Kosmos Energy Ltd. (NYSE:KOS)
Number of Hedge Fund Holders: 21
Market Cap as of May 19: $1.88 billion
Next on our list of the Best Small Cap Stocks is Kosmos Energy Ltd. (NYSE:KOS). It is a leading deepwater exploration and production company focused on meeting the world’s growing demand for energy.
On May 11, Bernstein boosted its price target on Kosmos Energy Ltd. (NYSE:KOS) from $2.10 to $2.40, while keeping a ‘Market Perform’ rating on the shares. The raised target still indicates a downside of over 24% from the current levels.
Bernstein acknowledged that the global oil markets could head in a multitude of directions in the current geopolitical landscape, including the extreme scenario of the waterway of Hormuz remaining closed for years. However, the firm updated its models assuming a return to normalcy by the mid of this year.
The target boost comes despite Kosmos Energy Ltd. (NYSE:KOS) falling behind estimates in its Q1 report on May 5. However, the company delivered a record daily and quarterly production during the quarter, driven by GTA fully ramped up and new wells at Jubilee. The energy firm expects to deliver production growth of 15% YoY in FY 2026, coming predominantly from its core, Jubilee, and GTA assets.
Moreover, Kosmos managed to reduce its operating costs by approximately 22% YoY, in addition to cutting its net debt by around 7% compared to year‑end 2025. The company intends to build on this momentum and raise its full‑year debt reduction target from 10% to approximately 20%.
Kosmos Energy Ltd. (NYSE:KOS) was also recently included in our list of the 10 Best Energy Stocks to Buy Under $20 According to Billionaires.
6. Ouster, Inc. (NASDAQ:OUST)
Number of Hedge Fund Holders: 23
Market Cap as of May 19: $1.94 billion
Ouster, Inc. (NASDAQ:OUST) is a leader in sensing and perception for Physical AI across industrial, robotics, automotive, and smart infrastructure.
On May 7, Ouster, Inc. (NASDAQ:OUST) was downgraded by Cantor Fitzgerald from ‘Overweight’ to ‘Neutral’. According to the analyst, the move is based on valuation, despite the company reaffirming its 2026 outlook and launching its REV8 OS family of digital lidar sensors.
On the other hand, Oppenheimer turned more bullish on Ouster, Inc. (NASDAQ:OUST) on the same day and raised its price target on the stock from $40 to $40, while keeping its ‘Outperform’ rating. The analyst firm highlighted Ouster’s status as a pioneer of the digital lidar technology, especially following the launch of REV8 and the advanced capabilities of its L4 chip family.
Oppenheimer expects Ouster, Inc. (NASDAQ:OUST) to report a notable increase in sales as the year progresses and customers continue to adopt its technology. The analyst firm also expects a significant jump in demand once customers begin integrating REV8 data, enabling faster and more advanced capabilities into their products.
While we acknowledge the potential of OUST as an investment, 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 OUST and that has 100x upside potential, check out our report about the cheapest AI stock.
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