In this article, we will look at the 11 best nano-cap stocks to buy for 2022.
Nano-cap stocks refer to companies that have a market cap of less than or around $50 million. These are volatile investments or trades and investors should always evaluate their risk tolerance before thinking about parking some cash in nano-caps.
A study conducted by O’Shaughnessy Asset Management, a Connecticut-based money management firm, examined and compared the returns of small-caps and large-caps between 1964 and 2017. The researchers at OSAM found that small-cap stocks returned over 5.1% per year between 1964 and 2017 and outperformed large-cap stocks, which returned -11.0% per year over the same period.
Nancy Prial, co-CEO of Massachusetts-based Essex Investment Management, appeared in an interview on CNBC where she made her bull case for small-cap stocks. Here are some comments from Nancy Prial:
“We saw small-caps and interestingly even micro-caps outperform on a relative basis (in the third quarter of 2022), and small-cap growth and micro-cap growth were two of the only sectors that were actually up a little bit for the quarter. One of the other factors for small-caps here is not only are the stocks very attractively valued, selling at valuations of 10x or less, in aggregate, on next year’s earnings and those earnings might be too high but that’s still a great valuation. We have also seen, historically, that it’s not really rising inflation so much as it is inflation that is high, leveling out, and starting to come down, which is the scenario that we think we are entering today. So that bodes very well for the outlook of this very neglected sector of the market (small-caps and micro-caps)…
We are going to go into a market that rewards individual stocks, as opposed to macro themes, that will be even more tailwinds for the small-cap sector”
Nano-cap stocks are not ideal for risk-averse investors. For investors with low risk tolerance, the best bet is to stick with investing in stable and mature businesses such as Microsoft Corporation (NASDAQ:MSFT), The Coca-Cola Company (NYSE:KO), and Johnson & Johnson (NYSE:JNJ).
Photo by Ruben Sukatendel on Unsplash
Our Methodology
We screened for nano-cap stocks and identified stocks that had attractive valuations, strong fundamentals, and interesting growth catalysts. We narrowed down our selection to stocks that are expected to capture more market share in the foreseeable future, based on the goods/services they offer.
Best Nano-Cap Stocks To Buy For 2022
11. Vyant Bio, Inc. (NASDAQ:VYNT)
Market Cap as of October 14: $14.1 Million
Number of Hedge Fund Holders: N/A
Vyant Bio, Inc. (NASDAQ:VYNT) is an American biotechnology company that is involved in the research and development of drugs for complex neurodevelopmental and neurodegenerative disorders. The company’s AI-powered central nervous system drug discovery platform is powered by human-derived organoid models of brain disease, scaled biology, and machine learning.
On August 22, Vyant Bio, Inc. (NASDAQ:VYNT) announced that the company’s cash and cash equivalents, as of June 30, sit at $11.7 million. The stock has come to the attention of Wall Street and as of October 14, has a 3-month average volume of over 25,000. On August 4, Ascendiant initiated coverage of Vyant Bio, Inc. (NASDAQ:VYNT) with a Buy rating and a $1.88 price target. The stock is one of the best micro-cap stocks to buy in 2022.
10. United Maritime Corporation (NASDAQ:USEA)
Market Cap as of October 14: $20.2 Million
Number of Hedge Fund Holders: N/A
United Maritime Corporation (NASDAQ:USEA) is a marine transportation company that provides seaborne transportation services worldwide. As of October 14, the stock has a trailing twelve-month PE ratio of 2.25 and has free cash flows of $3.6 million. United Maritime Corporation (NASDAQ:USEA) is utilizing its free cash flow efficiently and is one of the best micro-cap stocks to buy now. On September 22, the company announced a share buy-back program of an additional $3 million, after it had successfully purchased 1.86 million shares under its previous share repurchase authorization.
On October 13, United Maritime Corporation (NASDAQ:USEA) announced that it has entered into a definitive agreement with a third party to sell two Aframax tankers. The tankers are expected to be delivered within the fourth quarter of 2022 and the total sale price is valued at $62.5 million.
For investors that do not have the temperament for the volatility and high risk of investing in nano-caps, some of the top businesses to own for the long term include Microsoft Corporation (NASDAQ:MSFT), The Coca-Cola Company (NYSE:KO), and Johnson & Johnson (NYSE:JNJ).
9. CPI Aerostructures, Inc. (NYSE:CVU)
Market Cap as of October 14: $20.3 Million
Number of Hedge Fund Holders: N/A
CPI Aerostructures, Inc. (NYSE:CVU) is involved in the production of aircraft parts for both commercial and defense aircraft and helicopters. The company also offers reconnaissance pod structures, fuel panel systems, and maintenance, repair, & overhaul services. The company recently secured two orders from leading defense contractors, Lockheed Martin Corporation (NYSE:LMT) and Boeing Co (NYSE:BA). On July 7, CPI Aerostructures, Inc. (NYSE:CVU) announced that it has secured a $2.7 million order from Lockheed Martin Corporation (NYSE:LMT) for additional quantities of Rudder Island and Drag Chute Canister assemblies for the F-16V. The company is expected to begin delivering the assemblies to Lockheed Martin Corporation (NYSE:LMT) in the fourth quarter of 2023 and through the first half of 2022. On July 27, CPI Aerostructures, Inc. (NYSE:CVU) announced that it has received a $3.2 million order from Boeing Co (NYSE:BA) for structural assemblies for the A-10 Thunderbolt II. CPI Aerostructures, Inc. (NYSE:CVU) has received funding of roughly $23.4 million from Boeing Co (NYSE:BA) for the production of A-10 re-wing structural assemblies. The order is expected to reach completion by the end of August 2026.
CPI Aerostructures, Inc. (NYSE:CVU) has orders from major defense contractors such as Boeing Co (NYSE:BA) and Lockheed Martin Corporation (NYSE:LMT). The stock is trading at bargain levels and the company is cash-rich. As of October 14, the stock is trading at a PE multiple of 3x and has free cash flows of over $3.1 million. CPI Aerostructures, Inc. (NYSE:CVU) is one of the best micro-cap stocks to buy now.
8. FlexShopper, Inc. (NASDAQ:FPAY)
Market Cap as of October 14: $34 Million
Number of Hedge Fund Holders: 1
FlexShopper, Inc. (NASDAQ:FPAY) is a fintech company that operates an e-commerce store where consumers can shop for electronics, furniture, and other goods on a lease-to-own basis. On August 10, FlexShopper, Inc. (NASDAQ:FPAY) released strong earnings for the second quarter of fiscal 2022. The company reported earnings per share of $0.51 and beat estimates by $0.57. The company generated a revenue of $36.55 million, up 19% year over year, and outperformed expectations by $4.47 million.
FlexShopper, Inc. (NASDAQ:FPAY) has pulled back and is presenting an attractive entry point for investors. The stock is trading at a PE multiple of 3x, as of October 14, and the company has a trailing twelve-month operating margin of 7.47%. The stock is also generating activity on Wall Street and as of October 14, has a 3-month average volume of over 358,000. FlexShopper, Inc. (NASDAQ:FPAY) is ranked high among the best micro-cap stocks to buy now.
FlexShopper, Inc. (NASDAQ:FPAY) has a consensus Strong Buy rating from Wall Street analysts. The stock has received 3 Buy ratings from analysts over the past three months and has an average price target of $4.50, which implies an upside of 185% from current levels.
At the end of Q2 2022, Renaissance Technologies was the only hedge fund that had stakes in FlexShopper, Inc. (NASDAQ:FPAY). The fund’s stakes were valued at $169,000.
7. GSE Systems, Inc. (NYSE:GVP)
Market Cap as of October 14: $17.3 Million
Number of Hedge Fund Holders: 2
GSE Systems, Inc. (NYSE:GVP) is an American software company that specializes in software products for the power generation and chemical processing industries. The company has operations in the United States, Asia, Europe, and international markets. At the end of Q2 2022, 2 hedge funds were long GSE Systems, Inc. (NYSE:GVP) and held stakes worth $1.75 million in the company. Of those, Renaissance Technologies was the leading shareholder in GSE Systems, Inc. (NYSE:GVP) and held stakes worth $1.1 million.
On September 6, GSE Systems, Inc. (NYSE:GVP) announced that it has received an extension from the state of California for the operation of its nuclear facility in Diablo Canyon. The facility will remain open through 2030. On October 4, GSE Systems, Inc. (NYSE:GVP) announced that it has secured a $700,000 contract to implement a digital twin simulation system for a nuclear reactor in South Korea. GSE Systems, Inc. (NYSE:GVP) is expected to deliver the simulation technology in the fourth quarter of 2022 and the project is expected to complete by January 2025.
As of October 14, the stock has a trailing twelve-month PE ratio of 3.71 and has free cash flows of $1.97 million. GSE Systems, Inc. (NYSE:GVP) is one of the best micro-cap stocks to buy now as the world pushes for decarbonization and looks to alternative fuels such as nuclear to meet its energy requirements.
6. Air Industries Group (NYSE:AIRI)
Market Cap as of October 14: $18.4 Million
Number of Hedge Fund Holders: 2
Air Industries Group (NYSE:AIRI) is an aerospace and defense company that designs and manufactures structural parts and assemblies for mission-critical aerospace and defense applications. The company has two business divisions: Complex Machining and Turbine & Engine Components. Air Industries Group (NYSE:AIRI) has pulled back in 2022 and is trading at an attractive valuation. As of October 14, the stock has a trailing twelve-month PE ratio of 11.40. The company has free cash flows of $2.5 million and a trailing twelve-month operating margin of 4.44%. Air Industries Group (NYSE:AIRI) is ranked high among the best micro-cap stocks to invest in for 2022.
On September 15, Air Industries Group (NYSE:AIRI) announced that it has been awarded two contracts worth $5 million to manufacture flight-critical assemblies for the Blackhawk helicopter and for engine components for the F404 jet engine. At the end of Q2 2022, 2 hedge funds held stakes in Air Industries Group (NYSE:AIRI). The total value of these stakes amounted to $23,000. As of June 30, Renaissance Technologies is the top shareholder in the company and has stakes worth $15,000.
While Air Industries Group (NYSE:AIRI) may be a potential multi-bagger, investors with low risk tolerance should stick with tried and tested stocks like Microsoft Corporation (NASDAQ:MSFT), The Coca-Cola Company (NYSE:KO), and Johnson & Johnson (NYSE:JNJ).
5. CPS Technologies Corporation (NASDAQ:CPSH)
Market Cap as of October 14: $42.8 Million
Number of Hedge Fund Holders: 4
CPS Technologies Corporation (NASDAQ:CPSH) is a leading provider of advanced material solutions for the transportation, automotive, energy, computing, telecommunication, aerospace, defense, and oil & gas markets. On October 4, CPS Technologies Corporation (NASDAQ:CPSH) announced that it has secured an additional follow-on purchase order of $8.8 million for HybridTech Armor panels from Kinetic Protection, a prime contractor for the U.S. Navy.
As of October 14, CPS Technologies Corporation (NASDAQ:CPSH) is trading at a PE multiple of 11x and has free cash flows of roughly $1.7 million. The company has a trailing twelve-month operating margin of 6.84%. CPS Technologies Corporation (NASDAQ:CPSH) is one of the best micro-cap stocks to buy now.
Hedge funds are initiating positions in CPS Technologies Corporation (NASDAQ:CPSH). At the end of Q2 2022, 4 hedge funds held stakes in CPS Technologies Corporation (NASDAQ:CPSH). The collective stakes of these hedge funds were valued at $538,000. This is compared to 3 positions in the previous quarter with stakes of $715,000.
4. Fusion Fuel Green PLC (NASDAQ:HTOO)
Market Cap as of October 14: $59.4 Million
Number of Hedge Fund Holders: 4
Fusion Fuel Green PLC (NASDAQ:HTOO) is an Ireland-based green hydrogen company. The company provides hydrogen generators to clients that operate green hydrogen plants. Fusion Fuel Green PLC (NASDAQ:HTOO) is expected to benefit from secular growth trends in the green hydrogen space and is positioned to gain value in the foreseeable future. The stock is ranked high among the best micro-cap stocks to buy now.
On August 18, Fusion Fuel Green PLC (NASDAQ:HTOO) announced that it has received confirmation for funding the development of its 6.6-megawatt HEVO-Industria green hydrogen project in Sines from the Portuguese government. The Portuguese government is expected to give the company up to EUR 10 million to develop its green hydrogen project.
On September 22, RBC Capital analyst Erwan Kerouredan took coverage of Fusion Fuel Green PLC (NASDAQ:HTOO) with a Sector Perform rating and a $7 price target. The analyst noted that Fusion Fuel Green PLC (NASDAQ:HTOO) is a pure-play green hydrogen company and has a “differentiated” positioning in the energy transition space.
At the close of Q2 2022, 4 hedge funds were long Fusion Fuel Green PLC (NASDAQ:HTOO) and held stakes worth $15.45 million in the company. As of June 30, MAK Capital One is the leading shareholder in Fusion Fuel Green PLC (NASDAQ:HTOO) and has stakes worth $13.5 million in the company.
3. Zedge, Inc. (NYSE:ZDGE)
Market Cap as of October 14: $32.6 Million
Number of Hedge Fund Holders: 5
Zedge, Inc. (NYSE:ZDGE) is an interactive media and communication services company that provides phone personalization products. The company’s app offers users to personalize their smartphones with ringtones, widgets, wallpapers, and notifications. The company is cash-rich and also utilizes its resources efficiently by way of buy-backs. Zedge, Inc. (NYSE:ZDGE) has free cash flows of over $13 million and on August 16, the company announced that its board of directors has authorized a $1.5 million share buy-back program. Zedge, Inc. (NYSE:ZDGE) has pulled back and is offering investors a chance to rack up shares into weakness. As of October 14, the stock is trading at a PE multiple of 4x.
On September 20, Zedge, Inc. (NYSE:ZDGE) announced that it has added 1,000 of Saregama’s master recordings for ringtones to its platform. Saregama India is one of the largest music archives in the world. On October 3, Maxim analyst Allen Klee revised his price target on Zedge, Inc. (NYSE:ZDGE) to $8 from $13 and maintained a Buy rating on the shares.
At the end of Q2 2022, 5 hedge funds were eager on Zedge, Inc. (NYSE:ZDGE) and held stakes worth $3.06 million in the company. As of June 30, Renaissance Technologies is the largest shareholder in Zedge, Inc. (NASDAQ:ZDGE) and has stakes worth $2.18 million in the company.
2. Lipocine Inc. (NASDAQ:LPCN)
Market Cap as of October 14: $39.8 Million
Number of Hedge Fund Holders: 5
Lipocine Inc. (NASDAQ:LPCN) is a clinical-stage biopharmaceutical company that is involved in the research and development of pharmaceutical products for the treatment of neuroendocrine and metabolic disorders. The company’s flagship product is TLANDO, an oral testosterone replacement therapy. On September 15, Lipocine Inc. (NASDAQ:LPCN) announced that it has received FDA approval for establishing the efficacy of LPCN 1154, an oral neuroactive steroid for the treatment of postpartum depression. The company is profitable and undervalued and is one of the best micro-cap stocks to invest in for 2022. As of October 14, the stock is trading at a PE multiple of 11x and has a trailing twelve-month operating margin of 15.57%.
At the close of the second quarter of 2022, 4 hedge funds held stakes in Lipocine Inc. (NASDAQ:LPCN). The total value of these stakes amounted to $886,000. As of June 30, Marshall Wace LLP is the top shareholder in Lipocine Inc. (NASDAQ:LPCN) and has stakes worth $353,000 in the company.
1. Audacy, Inc. (NYSE:AUD)
Market Cap as of October 14: $48.8 Million
Number of Hedge Fund Holders: 15
Audacy, Inc. (NYSE:AUD) is an American broadcasting company that owns and operates radio stations in various formats, such as news, sports, talk, classic rock, urban, adult contemporary, alternative, country, and others. The stock has been creating a lot of activity on Wall Street and as of October 14, Audacy, Inc. (NYSE:AUD) has a 3-month average volume of over 828,000 and a 10-month average volume of 1.28 million. Audacy, Inc. (NYSE:AUD) is profitable, undervalued, and is ranked among the best micro-cap stocks to buy now. As of October 14, the stock has a trailing twelve-month PE ratio of 11.2 and an operating margin of 8.59%.
Wall Street analysts are positive on Audacy, Inc. (NYSE:AUD). This July, Guggenheim analyst Curry Baker revised his price target on Audacy, Inc. (NYSE:AUD) to $2 from $5 and reiterated a Buy rating on the shares. On August 8, B. Riley analyst Daniel Day revised his price target on Audacy, Inc. (NYSE:AUD) to 50c from $1 and maintained a Neutral rating on the shares.
At the end of Q2 2022, 15 hedge funds disclosed ownership of stakes in Audacy, Inc. (NYSE:AUD). These funds held collective stakes of $20.90 million in the company.
You can also take a look at 11 Best Entertainment Stocks To Buy and Top 10 Healthcare Stocks To Buy.
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