12 Cheap Small-Cap Stocks to Invest In Before the Next Breakout

1. STAAR Surgical Company (NASDAQ:STAA)

Number of Hedge Fund Holders: 34 

Market Capitalization: $1.04 billion 

Forward PE Ratio: 55.25

STAAR Surgical Company (NASDAQ:STAA) tops our list for being one of the best small-cap stocks on our list.

TheFly reported on January 16 that Morgan Stanley resumed coverage of STAA with an Underweight rating and a $13 price target following the termination of its merger agreement with Alcon (ALC). The firm described STAAR’s EVO ICL technology as “impressive” but noted it remains a niche product with a limited addressable patient pool. Morgan Stanley added that expansion in the U.S. and other Western markets will likely be challenging, even as the company executes effectively, and highlighted that it is “a bit surprising” the shares are trading above pre-merger levels.

Concurrently, on the same day, Canaccord Genuity lowered its price target on the stock to $22 from $30.75 and maintained a Hold rating. The adjustment follows the company’s cooperation agreement with its largest shareholder, Broadwood Partners, and the rejection of the Alcon merger by shareholders. Canaccord shifted its valuation framework back to STAAR’s standalone fundamentals rather than the proposed Alcon deal price.

STAAR Surgical Company (NASDAQ:STAA) is a U.S. ophthalmic medical device firm that designs, develops, manufactures, and markets implantable lenses, especially the EVO family of Implantable Collamer Lenses (ICLs), for vision correction to reduce reliance on glasses or contact lenses.

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

READ NEXT: 12 Best Multibagger Stocks to Buy Heading into 2026 and 7 Best Rising Tech Stocks to Buy Now.

Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email below.