12 Most Promising Small-Cap Stocks According to Analysts

In this article, we will look at the 12 most promising small-cap stocks to buy according to analysts.

Investing in small-cap stocks can be a great way to diversify your portfolio and get in on the ground floor of a promising company. Small-cap stocks are stocks with a market capitalization of less than $2 billion, and are usually considered to be more volatile than large-cap stocks. But, with the potential for higher returns, small-cap stocks can be attractive investments for those willing to take on a bit more risk.

Before investing in small-cap stocks, it’s important to understand the risks involved. Small-cap stocks are usually less liquid than your typical blue chips which include Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), and Amazon.com, Inc. (NASDAQ:AMZN). Additionally, since small-cap stocks are typically less well-known and researched, they can be more susceptible to price manipulation or market volatility.

BofA Analyst Bullish on Small-Caps

On January 7 BofA’s Head of US Small/Mid Cap Strategy, Jill Carey Hall, appeared on CNBC where she made the bull case for owning small-cap stocks in 2023. Hall noted that small-caps are discounting an economic downturn and that they are trading at attractive valuations. Hall said “valuations today are very compelling” and that “if you look at what happened in the 70s to early 80s, which was another backdrop when the Fed was trying to tame inflation, small-caps were the best-performing asset class from the mid-70s to the early 80s”.

Hall sees a similar macroeconomic backdrop today and sees small-caps driving outperformance relative to large-caps. Hall noted that “CapEx is going to remain more resilient” into a downturn and “small-caps typically benefit from CapEx”. Moreover, Hall said that historically small-caps have shown to have had more pricing power than large-caps in “environments where inflation’s remained sticky”. Here are some comments from Jill Carey Hall about what she sees ahead for U.S. equities in 2023:

“We do see more downside risk to U.S. equities overall, near-term, given our view that we will have a mild U.S. recession. But we do think that large-caps may actually have more downside risk than small-caps, near-term. And then once the market bottoms, that obviously tends to be the best time to own small-caps.”

Investing in small-cap stocks can be a risky endeavor and there is no guarantee of success. As with any investment, investors should exercise due diligence, evaluate their risk tolerance, and understand the potential risk and reward associated with the investment before committing capital. Let’s now look at some of the most promising small-cap stocks to invest in according to Wall Street analysts.

Our Methodology

We screened for small-cap stocks that held consensus positive ratings among Wall Street analysts. We looked at analysts’ 12-month price targets for each stock and narrowed down our selection to stocks with the highest 12-month average price targets. The average price targets were calculated by taking the mean of analysts’ price targets for each stock. We then calculated the upside potential by taking the percentage change that the average price target represents from the stock’s share price on February 10. We have ranked these stocks in ascending order of their average upside potential as of February 10.

12 Most Promising Small-cap Stocks According to Analysts

12. Pactiv Evergreen Inc. (NASDAQ:PTVE)

Number of Hedge Fund Holders: 19

Average Upside Potential as of February 10: 16.67%

Pactiv Evergreen Inc. (NASDAQ:PTVE) is a leading packaging company that manufactures and distributes food merchandising products and fresh beverage cartons. The company has three divisions: Foodservice, Food Merchandising, and Beverage Merchandising. As of February 10, Pactiv Evergreen Inc. (NASDAQ:PTVE) is trading at a TTM PE multiple of 6x and is offering a forward dividend yield of 3.68%.

This January, Citi analyst Anthony Pettinari revised his price target on Pactiv Evergreen Inc. (NASDAQ:PTVE) to $12 from $13 and maintained a Neutral rating on the shares. Over the past 3 months, Pactiv Evergreen Inc. (NASDAQ:PTVE) has received 1 Buy rating and 2 Hold ratings from Wall Street analysts. The stock’s average price target of $12.67 represents an upside of 16.67% from current levels. Pactiv Evergreen Inc. (NASDAQ:PTVE) is one of analysts’ most promising small cap stocks to buy now.

At the close of Q3 2022, 19 hedge funds were bullish on Pactiv Evergreen Inc. (NASDAQ:PTVE) and held positions wroth $90.5 million. As of December 31, Rubric Capital Management is the largest investor in the company and has a a stake worth $50.5 million.

For risk-averse investors, some of the top stocks to buy include Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), and Amazon.com, Inc. (NASDAQ:AMZN).

11. Malibu Boats, Inc. (NASDAQ:MBUU)

Number of Hedge Fund Holders: 16

Average Upside Potential as of February 10: 18.32%

Malibu Boats, Inc. (NASDAQ:MBUU) specializes in the production of recreational powerboats. The company has three segments: Malibu, Saltwater Fishing, and Cobalt. The company manufactures and distributes performance sport boats and sterndrive & outboard boats. This February, DA Davidson analyst Brandon Rolle raised his price target on Malibu Boats, Inc. (NASDAQ:MBUU) to $60 from $48 and reiterated a Neutral rating on the shares.

Malibu Boats, Inc. (NASDAQ:MBUU) is one of the most promising small-cap stocks to buy according to analysts. Over the past 3 months, the stock has received 5 Buy ratings and 1 Hold rating from Wall Street analysts. The stock has an average price target of $71.50 and a high price target of $80. The stock’s average price target represents an upside of 18.32% from current levels.

At the end of Q3 2022, 16 hedge funds held stakes in Malibu Boats, Inc. (NASDAQ:MBUU). The total value of these stakes amounted to $55.6 million. As of December 31, PEAK6 Capital Management owns over 1,200 shares of Malibu Boats, Inc. (NASDAQ:MBUU) and is the largest investor in the company.

10. Golden Ocean Group Limited (NASDAQ:GOGL)

Number of Hedge Fund Holders: 18

Average Upside Potential as of February 10: 21.58%

Golden Ocean Group Limited (NASDAQ:GOGL) is a leading shipping company that owns and operates a fleet of dry bulk vessels in the spot and time charter markets. As of February 10, the stock has gained 16.53% year to date and is trading at a PE multiple of 3x.

On January 30, Fearnley analyst Oystein Vaagen raised his price target on Golden Ocean Group Limited (NASDAQ:GOGL) to $11.50 from $9 and upgraded the stock to Buy from Hold. Over the past 3 months, Golden Ocean Group Limited (NASDAQ:GOGL) has received 2 Buy ratings and 1 Hold rating from Wall Street analysts. The stock’s average price target sits at $11.83 and implies an upside of 21.58% from current levels. Golden Ocean Group Limited (NASDAQ:GOGL) is one of analysts’ most promising small-cap stock picks.

At the close of the third quarter of 2022, 18 hedge funds were eager on Golden Ocean Group Limited (NASDAQ:GOGL)  and disclosed positions worth $47 million in the company. As of December 31, Navellier & Associates is the largest investor in the company and has a stake worth over $228,000.

9. Tecnoglass Inc. (NASDAQ:TGLS)

Number of Hedge Fund Holders: 15

Average Upside Potential as of February 10: 26.00%

Tecnoglass Inc. (NASDAQ:TGLS) is a leading designer and distributor of architectural glass, windows, and aluminum products for the commercial and residential construction industries across the globe. Over the past 6 months, Tecnoglass Inc. (NASDAQ:TGLS) has returned 31.86% to investors, as of February 10, and is currently trading at a PE multiple of 13x.

Tecnoglass Inc. (NASDAQ:TGLS) has a consensus Buy rating among Wall Street analysts. The stock has an average price target of $42.50 which represents an upside of 26% from current share levels. This February, B. Riley analyst Alex Rygiel raised his price target on Tecnoglass Inc. (NASDAQ:TGLS) to $43 from $40 and maintained a Buy rating on the shares. The stock is one of the most promising small-cap stocks to buy according to analysts.

At the end of the third quarter of 2022, Tecnoglass Inc. (NASDAQ:TGLS) was spotted on 15 investors’ portfolios that disclosed positions worth $81.75 million in the company. As of December 31, Polaris Capital Management is the top shareholder in the company and has a stake worth $20.8 million.

8. Air Transport Services Group, Inc. (NASDAQ:ATSG)

Number of Hedge Fund Holders: 20

Average Upside Potential as of February 10: 26.98%

Air Transport Services Group, Inc. (NASDAQ:ATSG) provides aircraft leasing, air cargo transportation and related services in the U.S. and international markets. The company offers aircraft and associated services such as flight crews, insurance, fuel and maintenance, as well as cargo load transfer, package sorting, crew training, airline express operation, and ground handling. Air Transport Services Group, Inc. (NASDAQ:ATSG) is one of analysts’ most promising small-cap stock picks.

On January 9, Truist analyst Michael Ciarmoli raised his price target on Air Transport Services Group, Inc. (NASDAQ:ATSG) to $29 from $28 and maintained a Hold rating on the shares.

Over the past 3 months, Air Transport Services Group, Inc. (NASDAQ:ATSG) has received 2 Buy ratings and 1 Hold rating from Wall Street analysts. The stock has a high forecast of $35 and an average forecast of $31.67. The stock’s average forecast implies an upside of roughly 27% from current levels.

At the close of Q3 2022, Air Transport Services Group, Inc. (NASDAQ:ATSG) was spotted on 20 investors’ portfolios. The total stakes of these hedge funds amounted to $97.3 million in the company. As of December 31, Prescott Group Capital Management is the largest investor in the company and owns over 269,000 shares.

7. HudBay Minerals Inc. (NYSE:HBM)

Number of Hedge Fund Holders: 14

Average Upside Potential as of February 10: 32.02%

Hudbay Minerals Inc. (NYSE:HBM) is a leading North American diversified mining company that is involved in the discovery, production, and marketing of base and precious metals in North and South America. The company’s primary focus is on copper concentrates containing copper, gold, and silver, molybdenum concentrates, and zinc metals. Shares of Hudbay Minerals Inc. (NYSE:HBM) have gained 10.96% over the past 6 months, as of February 10.

Hudbay Minerals Inc. (NYSE:HBM) has received 5 Buy ratings and 3 Hold ratings from Wall Street analysts over the past 3 months. The stock has an average price target of $6.68 which implies an upside of 32.02% from $5.06, the stock’s closing price on February 10. Hudbay Minerals Inc. (NYSE:HBM) is one of analysts’ most promising small-cap stocks to buy now.

On February 2, Credit Suisse analyst Fahad Tariq raised his price target on Hudbay Minerals Inc. (NYSE:HBM) to C$9 from C$8.50 and reiterated an Outperform rating on the shares.

At the end of Q3 2022, 14 hedge funds were long Hudbay Minerals Inc. (NYSE:HBM) and disclosed positions worth $174.8 million in the company. As of December 31, GMT Capital is the top investor in the company with a stake worth $159.79 million.

6. Everi Holdings Inc. (NYSE:EVRI)

Number of Hedge Fund Holders: 26

Average Upside Potential as of February 10: 40.31%

Everi Holdings Inc. (NYSE:EVRI) offers products and services to the casino and digital gaming industries worldwide. It has two divisions, Games and FinTech, that serve customers in the United States, Canada, the United Kingdom, Europe, the Caribbean, Central America, and Asia. The stock has a consensus Strong Buy rating among Wall Street analysts and is one of analysts’ most promising small-cap stocks to buy now.

As of February 10, Everi Holdings Inc. (NYSE:EVRI) has returned over 30% to investors year to date and is trading at $18.53 per share. The stock has an average price target of $26 which represents an upside of 40.31% from current levels.

On January 17, Craig-Hallum analyst George Sutton updated his price target on Everi Holdings Inc. (NYSE:EVRI) to $25 from $30 and reiterated a Buy rating on the shares. The stock has received 3 Buy ratings from Wall Street analysts over the past 3 months.

At the close of the third quarter of 2022, 26 hedge funds disclosed positions in Everi Holdings Inc. (NYSE:EVRI) worth $199.28 million. As of December 31, Skylands Capital is the most prominent shareholder in the company and owns over 65,000 shares.

Some blue chip stocks that have consensus Strong Buy ratings from Wall Street analysts include Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), and Amazon.com, Inc. (NASDAQ:AMZN).

5. Vista Outdoor Inc. (NYSE:VSTO)

Number of Hedge Fund Holders: 22

Average Upside Potential as of February 10: 43.72%

Vista Outdoor Inc. (NYSE:VSTO) is a leading global manufacturer of recreational and outdoor consumer products. The company operates through two segments: Sporting Products and Outdoor Products. Vista Outdoor Inc. (NYSE:VSTO) is trading at an attractive valuation and has the potential to gain 43.72%, on average, according to analysts’ price targets. As of February 10, the stock is trading at a PE multiple of 3x and is one of the most promising small-cap stocks to buy according to analysts.

On February 3, B. Riley analyst Eric Wold revised his price target on Vista Outdoor Inc. (NYSE:VSTO) to $41 from $45 and reiterated a Buy rating on the shares. Over the past 3 months, the stock has received 2 Buy ratings from Wall Street analysts. The stock has a high price target of $41 and an average price target of $38.

At the end of Q3 2022, 22 hedge funds were long Vista Outdoor Inc. (NYSE:VSTO) and disclosed positions worth $239.5 million in the company. As of December 31, PEAK6 Capital Management is the top investor in the company and owns over 1,900 shares of the stock.

4. Earthstone Energy, Inc. (NYSE:ESTE)

Number of Hedge Fund Holders: 21

Average Upside Potential as of February 10: 45.77%

Earthstone Energy, Inc. (NYSE:ESTE) is a small-cap oil and gas company that is involved in the acquisition, exploration, development, and production of oil and natural gas properties in the United States. On January 9, Mizuho analyst Nitin Kumar took coverage of Earthstone Energy, Inc. (NYSE:ESTE) with a Neutral rating and a $19 price target.

Over the past 3 months, Earthstone Energy, Inc. (NYSE:ESTE) has received 2 Hold ratings from Wall Street analysts. The stock has a high forecast of $21 and an average forecast of $20. The stock’s average price target represents an upside of 45.77% from current levels. Earthstone Energy, Inc. (NYSE:ESTE) is placed among the most promising small-cap stocks to buy according to analysts.

At the close of Q3 2022, 21 hedge funds held stakes in Earthstone Energy, Inc. (NYSE:ESTE). The total value of these stakes amounted to $59.3 million. As of December 31, First Eagle Investment Management is the largest investor in the company and has a position worth $3.28 million.

3. Sandstorm Gold Ltd. (NYSE:SAND)

Number of Hedge Fund Holders: 15

Average Upside Potential as of February 10: 49.62%

Sandstorm Gold Ltd. (NYSE:SAND) is a North American gold royalty company, involved in acquiring royalties and gold and other metals purchase agreements from mining companies. At the end of Q3 2022, 15 hedge funds were eager on Sandstorm Gold Ltd. (NYSE:SAND) and disclosed positions worth $120.5 million in the company.

This February, CIBC analyst Cosmos Chiu updated his price target on Sandstorm Gold Ltd. (NYSE:SAND) to C$10.50 from C$12.50 and maintained an Outperform rating on the shares.

Over the past 3 months, Sandstorm Gold Ltd. (NYSE:SAND) has received 5 Buy ratings and 1 Hold rating from Wall Street analysts. The stock has a consensus Strong Buy rating among analysts and is one of the most promising small-cap stocks to buy. The stock has an average price target of $7.93 which represents an upside of 49.62% from current levels.

As of December 31, Horizon Asset Management is the top investor in the company and has a position worth $33.49 million.

2. Gogo Inc. (NASDAQ:GOGO)

Number of Hedge Fund Holders: 17

Average Upside Potential as of February 10: 58.43%

Gogo Inc. (NASDAQ:GOGO) offers aviation broadband connectivity solutions worldwide, with separate divisions for North America, International markets, and Business Aviation. The company specializes in air-to-ground networks, in-flight systems, and customizable connectivity and wireless entertainment services. Gogo Inc. (NASDAQ:GOGO) is one of the most promising small-cap stocks to buy according to analysts and has gained 22.42% over the past 12 months, as of February 10.

Over the past 3 months, Gogo Inc. (NASDAQ:GOGO) has received 3 Buy ratings from Wall Street analysts and has a consensus Strong Buy rating. The stock has an average price target of $25 which represents a potential upside of 58.43% from current levels.

At the close of Q3 2022, 17 hedge funds disclosed positions in Gogo Inc. (NASDAQ:GOGO) worth $131.8 million. As of December 31, Yarra Square Partners is the top shareholder in the company and has a position worth $7.08 million.

1. Dynavax Technologies Corporation (NASDAQ:DVAX)

Number of Hedge Fund Holders: 22

Average Upside Potential as of February 10: 126.24%

Dynavax Technologies Corporation (NASDAQ:DVAX) is an American commercial-stage biotechnology company involved in the development and commercialization of novel vaccines in the United States. On January 31, Dynavax Technologies Corporation (NASDAQ:DVAX) announced that the company has been approved for uplisting to the Nasdaq Global Select Market.

On January 9, Dynavax Technologies Corporation (NASDAQ:DVAX) announced that the company’s preliminary HEPLISAV-B revenue for fiscal 2022 amounted to $126 million, up 104% year over year. Moreover, the company also announced that as of December 31, 2022, Dynavax Technologies Corporation (NASDAQ:DVAX) holds roughly $624 million in cash and cash equivalents, and marketable securities.

Dynavax Technologies Corporation (NASDAQ:DVAX) is one of analysts’ most promising small-cap stocks to buy now. The stock has a consensus Buy rating among analysts and an average price target of $25, which represents an upside of 126.24% from current levels.

At the end of Q3 2022, 22 hedge funds were long Dynavax Technologies Corporation (NASDAQ:DVAX) and disclosed positions worth $189.3 million in the company. As of December 31, Fisher Asset Management is the top stockholder in the company and owns over 4 million shares.

Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily enewsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below. You can also take a look at 15 Fastest Growing Countries in Asia and 12 Most Undervalued Retail Stocks.

Suggested articles:

• 11 Most Profitable Cheap Stocks to Buy
• 10 Set-it-and-Forget-it Stocks To Buy
• 20 Largest Private Companies in the World

Disclosure: None. 12 Most Promising Small-cap Stocks According to Analysts is originally published on Insider Monkey.