In this article, we discuss the 10 best 52-week low small-cap stocks to buy now.
The US stock markets have come under pressure as inflation rose faster than expected during August 2022. As reported by the US Department of Labor on September 13, The Consumer Price Index (CPI) increased by 0.1% in August as opposed to a consensus forecast expecting a dip of 0.1%. This has strengthened the case for the Federal Reserve to increase the benchmark interest rates by 0.75% during its meeting scheduled for next week. The rise in inflation comes at a time when supply chain-related challenges are easing across the world due to relaxation in COVID-19-related lockdowns. Meanwhile, the resilience of the labor market, along with the robust wage increase, reflects that inflation has not peaked yet. This will only encourage the Federal Reserve to adopt an aggressive stance to curb inflation and bring it back to its YoY target of 2%. During August, the CPI rose by 8.3% YoY. This means that the 12-month CPI has remained above the 8% level for the past six months.
Political Implications
This is not only a worrying sign for the Federal Reserve but also for the Biden government and the candidates of the Democratic Party competing for mid-term elections on November 8. Observers believe that the power in the House of Representatives will shift to the Republican side due to raging inflation. President Biden has highlighted that it will take more time and resolve to bring down inflation. The Biden Administration has recently passed the Inflation Reduction Act (IRA), which is targeted toward decreasing the cost of energy, healthcare, and prescription medicines to ease the burden on the average American. Some experts believe that the Federal Reserve and the US government are running behind in controlling inflation and cooling down the economy by taking necessary measures. However, it must be noted that the Federal Reserve has already increased benchmark interest rates twice by 0.75% each, during June and July, and brought the interest rate from near zero percent in March 2022 to a range of 2.25% to 2.5% currently.
On the other end, the labor market is displaying resilience. The applications for unemployment benefits hit a three-month low, according to the data released last week. In August, for every one person unemployed, there were two job openings available. These circumstances reflect a strong job market that is helping employees retain power and demand higher wages. The wage-spiral inflation is further aggravating the inflation levels.
The higher-than-expected CPI also caused a broader sell-off on September 13 and resulted in numerous stocks posting new 52-week lows. Popular tech stocks such as NVIDIA Corporation (NASDAQ:NVDA), Alphabet Inc. (NASDAQ:GOOG), and Meta Platforms, Inc. (NASDAQ:META) also suffered losses. Previously, the markets had been closing in the green for the past four consecutive sessions. The sell-off provides an attractive opportunity for investors to go long in stocks that have strong fundamentals and outlook.
Image by Sergei Tokmakov Terms.Law from Pixabay
Our Methodology
We have shortlisted 10 solid stocks that are trading within a range of 5% from their 52-week low and offer attractive upside to their shareholders. We have selected small-cap stocks that have a market capitalization in the range of $300 million to $2 billion as of September 15. The growth prospects and analyst ratings have been discussed for the companies. These stocks have been ranked from the lowest to the highest in terms of hedge fund holders as of Q2 2022.
Best 52-Week Low Small-Cap Stocks to Buy Now
10. Celularity Inc. (NASDAQ:CELU)
Number of Hedge Fund Holders: 6
Celularity Inc. (NASDAQ:CELU) is a Florham Park, New Jersey-based company that is working on an innovative approach to cell therapy. The company has multiple cell therapy candidates in the clinical and pre-clinical development stages. Celularity Inc. (NASDAQ:CELU) was founded in 2016 following the spin-off from the Cell Therapeutics Department of Celgene.
James Molloy at Alliance Global Partners initiated coverage on Celularity Inc. (NASDAQ:CELU) stock with a target price of $15 and a Buy rating in a note issued to investors on August 25. The analyst highlighted that Celularity Inc. (NASDAQ:CELU) has a “deep pipeline” in the field of placenta-derived allogeneic therapies for curing cancer and infectious and immune-related diseases.
The concern about the cash position has caused Celularity Inc.’s (NASDAQ:CELU) stock price to plummet to its 52-week low following the Q2 2022 results. Observers believe that the data expected to be published during the second half of the year will provide an idea of the growth potential of Celularity Inc.’s (NASDAQ:CELU) platform, boosting the stock price.
9. Amneal Pharmaceuticals, Inc. (NYSE:AMRX)
Number of Hedge Fund Holders: 11
Amneal Pharmaceuticals, Inc. (NYSE:AMRX) is a Bridgewater Township, New Jersey-based manufacturer of generic and specialty pharmaceutical products. The company has a portfolio of over 250 generic medicines.
On August 31, Amneal Pharmaceuticals, Inc. (NYSE:AMRX) submitted a new drug application (NDA) to the Food and Drug Administration (FDA) in the US for IPX 203. The drug releases carbidopa/levodopa (CD/LD) for an extended period and is used for controlling the highly damaging Parkinson’s disease. Amneal Pharmaceuticals, Inc. (NYSE:AMRX) issued the NDA on the back of the Phase 3 data that revealed better results as compared to immediate release CD/LD.
Before the broad market sell-off, the stock of Amneal Pharmaceuticals, Inc. (NYSE:AMRX) faced an overdone sell-off after a report highlighted that numerous generic manufacturing companies settled their case related to the alleged claims that Zantac was contaminated with nitrosodimethylamine (NDMA). However, analysts remain bullish on the long-term outlook of Amneal Pharmaceuticals, Inc. (NYSE:AMRX) as the company has unique products in its portfolio.
8. Latham Group, Inc. (NASDAQ:SWIM)
Number of Hedge Fund Holders: 13
Latham Group, Inc. (NASDAQ:SWIM) is a leading designer, manufacturer, and marketer of in-ground residential swimming pools across the North American region. The company is at the eighth position on our list of the 10 best 52-week low small-cap stocks to buy now.
In a research note issued on August 10, Keith Hughes at Truist gave Latham Group, Inc. (NASDAQ:SWIM) stock a target price of $10 and reiterated a Buy rating on the stock. The analyst highlighted that the company reported mixed results for Q2 2022 and had to cut revenue and EBITDA guidance for 2022 due to macroeconomic uncertainty and expectation of softer demand due to the weather outlook not supporting the pool season.
However, experts believe that the valuation of Latham Group, Inc. (NASDAQ:SWIM) is favorable and offers significant growth potential. Despite the tough economic circumstances, Latham Group, Inc. (NASDAQ:SWIM) displayed strong operational resilience during the second quarter. The company achieved higher production levels of North American fiberglass and also improved its lead times. Analysts expect the company to recover quickly from the temporary setbacks.
Latham Group, Inc. (NASDAQ:SWIM) was discussed in the Q3 2021 investor letter of Baron Funds. Here’s what the investment management firm said:
“Following strong initial share price performance after its April IPO, the shares of Latham Group, Inc., the largest manufacturer of fabricated pools globally, reversed course and declined sharply in the most recent quarter following disappointing quarterly results and the announcement of the departure of a key employee. We exited the Fund’s position in the company.”
7. Smith & Wesson Brands, Inc. (NASDAQ:SWBI)
Number of Hedge Fund Holders: 13
Smith & Wesson Brands, Inc. (NASDAQ:SWBI) is a Springfield, Massachusetts-based firearm company. The company is considered a leader in the production of pistols, revolvers, rifles, and shooting accessories.
In a research note issued to investors on September 9, Mark Smith at Lake Street assigned Smith & Wesson Brands, Inc. (NASDAQ:SWBI) stock a target price of $22 and maintained a Buy rating. Although the company reported mixed Q1 FY23 results due to demand normalizing and seasonal weakness, the analyst believes that Smith & Wesson Brands, Inc. (NASDAQ:SWBI) stock still offers long-term growth potential by pursuing a disciplined approach. Smith & Wesson Brands, Inc. (NASDAQ:SWBI) could have easily overloaded its inventory channels, boosting the current quarterly results but opted not to do so to maintain its focus on the long-term goals.
Experts believe the company has touched the revenue and margins bottom during Q1 FY23. Hence, investors can expect a substantial improvement in the margins in the future. Smith & Wesson Brands, Inc. (NASDAQ:SWBI) has a forward P/E ratio of 6.8x, in comparison to the 5-year historical forward P/E of 11.61x, indicating a significant discount. Furthermore, Smith & Wesson Brands, Inc. (NASDAQ:SWBI) offers a forward dividend yield of 3.44% as of September 15. The company’s strong business fundamentals make it one of the ten best 52-week low small-cap stocks to buy now.
6. Organogenesis Holdings Inc. (NASDAQ:ORGO)
Number of Hedge Fund Holders: 15
Organogenesis Holdings Inc. (NASDAQ:ORGO) is a Canton, Massachusetts-based regenerative medicine company focused on developing products for advanced wound care and catering to the demands of the surgical and sport medicine markets.
On August 15, Organogenesis Holdings Inc. (NASDAQ:ORGO) received the 510k clearance from the FDA for its wound healing product PuraPly MZ. The product will provide an option to support healing complex wounds. Organogenesis Holdings Inc. (NASDAQ:ORGO) is a profitable entity that is continuing to expand its product portfolio. Analysts anticipate the company to finish 2022 with revenue and EPS of $476.86 million and 22 cents, respectively. The revenue forecast assumes a 1.88% YoY growth, which is expected to accelerate to 8.06% in 2023 for annual revenue of $515.28 million along with an annual EPS of 31 cents. This would translate into a forward P/E multiple of 11.45x.
Soleus Capital raised its stake in Organogenesis Holdings Inc. (NASDAQ:ORGO) by 109% during Q2 2022.
In addition to Organogenesis Holdings Inc. (NASDAQ:ORGO) declining during the recent market sell-off on September 13, notable big-cap stocks such as NVIDIA Corporation (NASDAQ:NVDA), Alphabet Inc. (NASDAQ:GOOG), and Meta Platforms, Inc. (NASDAQ:META) also recorded a significant decline in stock prices.
5. Holley Inc. (NYSE:HLLY)
Number of Hedge Fund Holders: 15
Holley Inc. (NYSE:HLLY) is a Bowling Green, Kentucky-based automotive performance company that was founded in 1896. The company specializes in advanced fuel-system designs through its market-leading electronic fuel injection (EFI) products.
In a research note issued to investors on August 12, Michael Swartz at Truist gave Holley Inc. (NYSE:HLLY) stock a target price of $10 and reiterated a Buy rating on the stock. The target price assumes a potential upside of over 75% from the closing price as of September 15. The analyst agreed that the company’s Q2 2022 results were not “pretty.” However, the challenges faced by Holley Inc. (NYSE:HLLY) during the three months was temporary and should not impact the long-term outlook of the company. The analyst maintains a bullish stance on Holley Inc. (NYSE:HLLY) stock and recommends it to investors with a long-term investment horizon.
Here’s what Wasatch Global Investors said about Holley Inc. (NYSE:HLLY) in its Q2 2022 investor letter:
“Another contributor was Holley, Inc., which designs, manufactures and sells high- performance automotive parts for car and truck enthusiasts. The company’s loyal customer base, healthy margins and specialized product offerings have enabled it to pass along higher costs and better withstand the impacts of inflation— especially compared to other businesses that lack the same pricing power. Investors reacted positively to Holley’s most recent round of acquisitions, which are expected to help unlock new and large markets of strategic importance to the company. Holley’s latest earnings report confirmed its organic growth profile, further underpinning confidence in the company’s future prospects. Holley is a former special-purpose acquisition company (SPAC), and there have been general concerns over SPACs because they usually issue warrants (options to purchase stock at a fixed price) that can dilute shareholder ownership down the road. For our part, we factor potential dilution into our analysis whenever we invest in a former SPAC. Regarding Holley specifically, last year we maintained our positive outlook for the company and we were rewarded in the first quarter of 2022.”
Overall, 15 hedge funds reported owning a stock in Holley Inc. (NYSE:HLLY) at the end of Q2 2022.
4. Hillman Solutions Corp. (NASDAQ:HLMN)
Number of Hedge Fund Holders: 18
Hillman Solutions Corp. (NASDAQ:HLMN) is a Cincinnati-based provider of simple hardware solutions that caters to the complex needs of its customers through 42,000 locations across the US.
The analysts believed that the Q2 2022 earnings season would bring a reduction in Hillman Solutions Corp.’s (NASDAQ:HLMN) financial guidance for Q3 2022 and the full year 2022 to reflect the potential weakness observed in the home building and building product segment. However, Hillman Solutions Corp. (NASDAQ:HLMN) maintained its 2022 revenue guidance in the range of $1.5 billion to $1.6 billion as opposed to the consensus estimate of $1.5 billion when the company reported its Q2 2022 results on August 3. Furthermore, the company maintained its free cash flow (FCF) guidance of $120 million to $130 million. Hillman Solutions Corp. (NASDAQ:HLMN) is working on expanding its product portfolio and is expected to gain greater market share in the coming years.
ClearBridge Investments shared its bullish outlook on Hillman Solutions Corp. (NASDAQ:HLMN) in its Q4 2021 investor letter. Here’s what the firm said:
“We completely agree with Ben Graham’s alleged assessment: “In the short run, the market is a voting machine, but in the long run, it is a weighing machine.” In 2021 we observed votes being cast against companies based solely on how and when they raised capital, as if the choice of financing vehicle overrides the longterm value creation of the underlying business. The Initial Public Offerings Class of 2021 and companies that raised capital by merging with Special-Purpose Acquisition Companies (SPACs) were two such areas that detracted from the Strategy’s performance. Over time we trust that the value of each of the businesses underlying these holdings will be reflected as the “weighting machine” resumes operation. Of course, many IPOs and SPAC acquisitions were immature businesses — often just concepts — that shouldn’t be public, but with so many deals done, there are sure to be babies in that bathwater.
One such example is Hillman Solutions, which concluded the process of merging with Landcadia Holdings III (a SPAC) in mid2021. Hillman is a hardware distributor and provider of automation tools (for example, key making and knife sharpening) to retailers in the U.S. In the short term, supply chain issues have impacted the business while the treatment of SPAC-related warrants appears to have been a focus for bearish investors. In the long-term, Hillman is well-positioned to continue growing given the quality and labor alternative provided by its services. Despite a recent decline, Hillman’s fill rates (i.e., in-stock inventory) remain the highest in the industry, which should lead to market share gains and likely entry into additional product categories. Hillman’s business model, which includes taking over inventory, distribution and floor staffing, as well as solutions such as automated self-service kiosks, helps to address one of the main pressure points in its customers’ business: labor. Meanwhile the expectations for future growth and profitability discounted in Hillman’s current stock price are extremely modest relative to its potential.”
3. Cerus Corporation (NASDAQ:CERS)
Number of Hedge Fund Holders: 19
Cerus Corporation (NASDAQ:CERS) is a Concord, California-based biotechnology company involved in developing and providing pathogen-protected blood components to blood centers and hospitals.
Cerus Corporation’s (NASDAQ:CERS) Intercept Blood System for platelets and plasma is the only pathogen reduction system that has received approval from the FDA along with a CE mark that reflects the conformity to the European standards of health and safety. Cerus Corporation (NASDAQ:CERS) has agreed on a five-year extension with the American Red Cross for the Intercept System. The American Red Cross is responsible for providing nearly 40% of all the blood in the US. On the other hand, the company has also signed an agreement with Fresenius Kabi to produce the Intercept Kits for the next decade. The company’s bright future prospects justify its position in our list of the 10 best 52-week low small-cap stocks to buy now.
Baker Bros. Advisors was the leading hedge fund investor in Cerus Corporation (NASDAQ:CERS) during Q2 2022.
2. Wheels Up Experience Inc. (NYSE:UP)
Number of Hedge Fund Holders: 19
Wheels Up Experience Inc. (NYSE:UP) is a New York-based private aviation service provider that offers on-demand private flights with all the necessary amenities. The company has a fleet of over 200 aircraft and provides access to over 1,200 third-party aircraft.
Experts believe that Wheels Up Experience Inc. (NYSE:UP) is serving an established end market with a potential for high growth. Goldman Sachs also expressed a bullish stance on Wheels Up Experience Inc. (NYSE:UP), citing that the company has significant unique growth catalysts for the long term. However, the investment firm also shared that the private aviation services market is fragmented and requires an asset efficiency model. Wheels Up Experience Inc.’s (NYSE:UP) current share price offers an attractive entry point for potential long-term investors.
During August, Wheels Up Experience Inc. (NYSE:UP) unveiled a number of efforts that ought to yield fruitful outcomes in the future. The company’s controlled fleet is managed via the UP FMS platform from a centralized dashboard. This is expected to increase the effectiveness with which daily tasks and crew scheduling are managed.
Of the 895 hedge funds in Insider Monkey’s database, 19 funds reported owning a stake in Wheels Up Experience Inc. (NYSE:UP) during Q2 2022.
1. The Hain Celestial Group, Inc. (NASDAQ:HAIN)
Number of Hedge Fund Holders: 25
The Hain Celestial Group, Inc. (NASDAQ:HAIN) is a New York-based natural and organic food product company that was founded in 1957.
Anthony Vendetti at Maxim gave The Hain Celestial Group, Inc. (NASDAQ:HAIN) stock a target price of $42, along with a Buy rating in a research note issued on August 26. The target price assumes a potential upside of over 123% from the closing price as of September 15. The analyst highlighted that The Hain Celestial Group, Inc.’s (NASDAQ:HAIN) penetration of the growing brands increased by 5% YoY during Q4 FY22 despite the price increase. These brands are responsible for generating 80% of volume and profits from the North American business. The analyst concluded this was a positive development for the corporation.
As of Q2 2022, 25 elite funds reported owning a stake in The Hain Celestial Group, Inc. (NASDAQ:HAIN).
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Disclose. None. 10 Best 52-Week Low Small-Cap Stocks to Buy Now is originally published on Insider Monkey.
