5 Best Small-Cap Stocks Ready To Explode According To Hedge Funds

In this article, we will look at the 5 best small-cap stocks that are ready to explode. If you want to explore similar stocks, you can go to 15 Best Small-Cap Stocks Ready To Explode According To Hedge Funds.

5. Pure Storage, Inc. (NYSE:PSTG)

Number of Hedge Fund Holders: 39

Pure Storage, Inc. (NYSE:PSTG) is an American provider of data storage technologies and services. The company develops all-flash data storage hardware and software products and serves in the United States and across the globe. On March 1, the company posted earnings for the fiscal fourth quarter of 2023. The company reported an EPS of $0.53 and outperformed EPS estimates by $0.14. The company’s revenue for the quarter amounted to $810.21 million, up 14.34% year over year.

Pure Storage, Inc. (NYSE:PSTG) was held by 39 hedge funds at the end of Q4 2022. The total stakes of these hedge funds amounted to $1.01 billion in the company. This is compared to 35 hedge funds in the preceding quarter with stakes worth $1.11 billion. As of December 31, Ken Griffin’s Citadel Investment Group is the top shareholder in the company and has a position worth $136.8 million.

4. Tempur Sealy International Inc. (NYSE:TPX)

Number of Hedge Fund Holders: 41

Tempur Sealy International, Inc. (NYSE:TPX) is an American provider of mattresses and bedding products. As of March 3, the stock has gained 26.68% year to date and is ranked fourth among the most explosive small-cap stocks to buy now according to hedge funds.

At the close of Q4 2022, 41 hedge funds were long Tempur Sealy International Inc. (NYSE:TPX) and disclosed positions worth $1.15 billion in the company. This is compared to 33 hedge funds in the previous quarter with stakes worth $651.2 million in the company. The hedge fund sentiment for the stock is positive.

As of December 31, Select Equity Group has a position worth $330.9 million in Tempur Sealy International Inc. (NYSE:TPX) and is the top investor in the company.

3. Endeavor Group Holdings, Inc. (NYSE:EDR)

Number of Hedge Fund Holders: 42

Endeavor Group Holdings, Inc. (NYSE:EDR) is an American communication services company with worldwide operations. The company has three business divisions: Owned Sports Properties, Events, Experiences & Rights, and Representation. As of March 3, the stock has returned 13.40% to investors year to date and is placed third on our list of the most explosive small-cap stocks to buy now according to hedge funds.

At the end of the fourth quarter of 2022, 42 hedge funds were eager on Endeavor Group Holdings, Inc. (NYSE:EDR) and held positions worth $3.43 billion in the company. This is compared to 36 hedge funds in the previous quarter with stakes worth $3.01 billion. As of December 31, Silver Lake Partners is the most prominent shareholder in the company and has a position worth $2 billion.

2. Axalta Coating Systems Ltd (NYSE:AXTA)

Number of Hedge Fund Holders: 45

Axalta Coating Systems Ltd (NYSE:AXTA) is a leading American chemicals company that distributes high-performance coatings systems. The company has two business segments: Performance Coatings and Mobility Coatings. Axalta Coating Systems Ltd (NYSE:AXTA) is ranked second among the top small-cap stocks ready to explode, according to hedge funds.

On January 25, Axalta Coating Systems Ltd (NYSE:AXTA) posted strong earnings for the fourth quarter of fiscal 2022. The company generated a revenue of $1.24 billion, up 8.75% year over year and ahead of Wall Street consensus by $19.68 million. The company reported an EPS of $0.38 and outperformed EPS estimates by $0.03.

Axalta Coating Systems Ltd (NYSE:AXTA) was held by 45 hedge funds at the end of Q4 2022. These funds held collective stakes worth $914.4 million in the company, up from $790.9 million in the previous quarter with 38 positions. As of December 31, Ariel Investments is the largest stockholder in the company and has a stake worth $180.8 million.

1. RH (NYSE:RH)

Number of Hedge Fund Holders: 49

RH is a leading American home furnishings retailer. The company offers furniture, lighting, textiles, bathroom accessories, décor, outdoor and garden, and child and teen furnishings. RH is the most explosive small-cap stock to buy now according to hedge funds and has gained 21.95% over the past 6 months.

At the close of the fourth quarter of 2022, 49 hedge funds held stakes in RH (NYSE:RH). The total value of these stakes amounted to $2.66 billion. This is compared to 48 hedge funds in the preceding quarter with stakes worth $2.31 billion. The hedge fund sentiment for the stock is positive.

As of December 31, Warren Buffett’s Berkshire Hathaway is the leading investor in RH (NYSE:RH) and has disclosed a position worth $630.5 million in the company.

Here is what Polen Capital had to say about  RH (NYSE:RH) in its Q4 2022 investor letter:

“RH (NYSE:RH) is a leading luxury retailer in home furnishings, including high end luxury furniture, home décor, lighting, textiles, etc. We have a long history with RH as an existing holding in our U.S. SMID strategy, and we capitalized on the market volatility to add it to the Portfolio. The company’s competitive advantage stems from the strength of its brand and its unique—and often misunderstood—business model, which has allowed RH to build a luxury empire at scale and with high returns on capital. We believe RH has a long runway to expand into other home furnishings categories, expand its footprint internationally, and launch new luxury categories. While the business faces near-term challenges, and the stock’s valuation reflects this, we are confident in the company’s long-term prospects and the long track record of CEO Gary Friedman.”

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