In this article, we will look at the 9 Best Small-Cap Growth Stocks to Invest In Now.
On June 30, CNBC released a research report noting that the US small-cap stocks are having the best first half since 1991. This is reflected in the Russell 2000 index, which has gained more than 21% this year and marks a sharp reversal of the trend in which small-caps were trailing behind large-cap stocks.
The report noted that unlike past small-cap cycles, which were related to the economic situation, the current rally is led by AI infrastructure spending. CNBC noted that the benefits of AI capital expenditure are not limited to mega-cap stocks but also to smaller suppliers. Moreover, semiconductor and chip stocks have led the gains so far, as 16 of the Russell 2000’s top 50 performers came from this sector. Analysts are also quoting improved earnings and strong fundamentals as one of the key reasons behind the small-cap dominance.
With that, let’s take a look at the 9 Best Small-Cap Growth Stocks to Invest In Now.
Our Methodology
To curate the list of 9 Best Small-Cap Growth Stocks to Invest In Now, we used screeners to identify stocks with market caps between $300 million and $2 billion and expected EPS growth of at least 30% over the next 5 years. These stocks are also popular among analysts and elite hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Insider Monkey’s quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 599.2% since May 2014, beating its benchmark by 372 percentage points (see more details here).
9 Best Small-Cap Growth Stocks to Invest In Now
9. OmniAb, Inc. (NASDAQ:OABI)
Number of Hedge Fund Holders: 20
OmniAb, Inc. (NASDAQ:OABI) is one of the Best Small-Cap Growth Stocks to Invest In Now. The stock has gained more than 38% over the past 6 months and around 74% since the release of its fiscal Q1 2026 earnings and business update.
The company reported earnings on May 7, showing significant improvement and prompting an upgrade to its full-year guidance. During the quarter, the revenue surged from $4.2 million to $14.4 million compared to the same quarter last year. Management attributed the increase to be largely driven by milestone payments from partner programs advancing into later-stage clinical trials.
Notably, the cost came down as research and development costs dropped from $12.6 million to $9.6 million, and general & administrative costs fell from $7.9 million to $6.6 million. Moreover, the net loss narrowed from $18.2 million in Q1 2025 to $7.7 million in Q1 2026. Management also highlighted OmniUltra and the xPloration partner access program as recent additions to its portfolio.
As a result of this strong performance, OmniAb, Inc. raised the full-year guidance and now expects revenue to be in the range of $28 million – $33 million, up from the previous range of $25 million – $30 million.
OmniAb Inc. provides licenses to pharmaceutical and biotech companies for discovery research technology around various parts of the world. To find the best antibodies and other target-binding proteins for partners’ drug development efforts, the company’s technology platform creates and screens diverse antibody repertoires. Animal-based technologies are also offered by the company.
8. Orthofix Medical Inc. (NASDAQ:OFIX)
Number of Hedge Fund Holders: 21
Orthofix Medical Inc. (NASDAQ:OFIX) is one of the Best Small-Cap Growth Stocks to Invest In Now. The stock has declined roughly 22% since its fiscal Q1 2026 earnings. Despite the softness, the Street remains bullish, with analysts’ 12-month price target suggesting more than 54% upside from the current level.
Orthofix Medical Inc. released earnings last month on May 5. During the quarter, the revenue came in at $196.71 million and surpassed the estimates of $194.71 million. Management noted that performance varied by segment. Spine Fixation grew 6%, supported by stronger commercial execution and procedural penetration; Therapeutic Solutions grew 5%, and Limb Reconstruction grew 10% on a reported basis.
Orthofix Medical Inc. last issued guidance on May 21, 2026 for fiscal year 2026. It expects net sales for full-year 2026 to be in the range of $838 million to $848 million and non-GAAP adjusted EBITDA to be in the range of $90 million to $93 million. At this time, the Company does not expect positive free cash flow for full-year 2026.
Orthofix Medical Inc. is a global medical device company focused on spine and orthopedic solutions. It develops and markets implants, biologics, and bone growth therapies to support musculoskeletal healing and improve patient mobility and recovery outcomes.
7. Telos Corporation (NASDAQ:TLS)
Number of Hedge Fund Holders: 22
Telos Corporation (NASDAQ:TLS) is one of the Best Small-Cap Growth Stocks to Invest In Now. Telos Corporation (NASDAQ:TLS) has gained roughly 6% since the release of its fiscal Q1 2026 earnings.
The gains were driven by a significant earnings beat as revenue of $47.7 million came ahead of the expectation of $44.6 million, and the EPS of $0.06 also topped the consensus of $0.02.
During the quarter, the revenue jumped 56% year-over-year, driven by a 78% growth in Security Solutions, largely from strong TSA PreCheck enrollment activity and the expansion of large Telos ID programs. Moreover, profitability also improved sharply as GAAP gross margins came in at 36.4%.
Looking ahead, management reaffirmed its full-year 2026 guidance and expects double-digit year-over-year revenue growth, lower operating expenses, and expansion in adjusted EBITDA margins and free cash flow. This outlook is supported by a healthy $500 million contract pipeline. Moreover, some recent wins for the company include a Missile Defense Agency SHIELD contract and a $5.4 million cybersecurity renewal with a Fortune 100 firm.
Telos Corporation is a cybersecurity and cloud solutions company that provides security services for government agencies and other security-conscious organizations.
6. Microvast Holdings, Inc. (NASDAQ:MVST)
Number of Hedge Fund Holders: 22
Microvast Holdings, Inc. (NASDAQ:MVST) is one of the Best Small-Cap Growth Stocks to Invest In Now. Microvast Holdings, Inc. (NASDAQ:MVST) declined sharply after its fiscal Q1 2026 earnings on May 11. The Street remains bullish on the stock, with analysts’ 12-month average price target suggesting more than 386% upside from the current level.
During the quarter, the company posted $60.6 million in revenue, which declined 48% year-over-year and fell short of the expected $132.8 million mark. The non-GAAP EPS of -$0.04 also fell short of the expectation by 180%.
Management noted that the decline in revenue was due to regulatory shifts in India and Korea, a demand shift toward cheaper products, and OEM production delays. Moreover, the gross margins slipped from 36.9% to 31.6%, which was mainly due to lower factory utilization.
On the bright side, cash reserves grew to $174 million, and operating expenses were trimmed.
Looking ahead, Microvast is focused on ramping up its Huzhou Phase 3.2 expansion and plans to add 2 GWh of capacity and launch new 290Ah battery packs. The company is also building US assembly capabilities in Clarksville, aiming to strengthen its position in heavy industrial and transit markets despite ongoing geopolitical headwinds.
Microvast Holdings, Inc. designs and manufactures lithium-ion battery components, cells, and systems for electric vehicles and energy storage, leveraging technologies such as LTO, LFP, and NMC chemistries.
5. Vanda Pharmaceuticals Inc. (NASDAQ:VNDA)
Number of Hedge Fund Holders: 23
Vanda Pharmaceuticals Inc. (NASDAQ:VNDA) is one of the Best Small-Cap Growth Stocks to Invest In Now. Recently, on June 4, H.C. Wainwright reiterated a Buy rating on Vanda Pharmaceuticals Inc. (NASDAQ:VNDA) with a price target of $21.
The rating is based on an update through a Federal Register notice on the company’s regulatory situation. The company is seeking approval from the FDA for a drug called HETLIOZ as a treatment for jet lag. However, the FDA didn’t approve the drug initially. The company disagreed and asked for a formal hearing to argue its case. The FDA agreed to give them one. This is a big deal because this kind of hearing hasn’t happened for any drug in over 40 years.
The notice sets a pre-hearing conference for July 20, 2026, where the FDA will schedule a formal evidentiary public hearing regarding its proposal to refuse approval of Vanda’s supplemental application for HETLIOZ.
The hearing was granted by the FDA in March 2026, and H.C. Wainwright expects the actual hearing to occur before year-end. The analyst highlighted a key opportunity, noting that although generic tasimelteon already exists on the market, securing this new jet lag indication could let Vanda generate branded prescription sales largely insulated from generic competition.
Vanda Pharmaceuticals Inc. is a biopharmaceutical company focused on developing and selling therapies for unmet medical needs.
4. NET Power Inc. (NYSE:NPWR)
Number of Hedge Fund Holders: 23
NET Power Inc. (NYSE:NPWR) is one of the Best Small-Cap Growth Stocks to Invest In Now. On June 11, Barclays identified key gas power generation equipment companies that are expected to benefit from artificial intelligence infrastructure spending acceleration.
The firm projects that annual AI capital expenditure can surpass $1 trillion before 2028, which, in turn, is expected to drive demand for power generation capacity. The firm named NET Power Inc. as one of the companies set to benefit from this increased spending on AI.
The company, on May 11, highlighted progress on its core development project while emphasizing a strategic pivot in how it generates power. Management noted that they are shifting from the company’s original proprietary technology to pairing it with Siemens gas turbines with post-combustion carbon capture technology. Entropy’s post-combustion carbon-capture technology has demonstrated an approximately 90% carbon-capture rate.
Notably, management highlighted that Project Permian Phase I remains on track and targets 80MW of output. A final investment decision is expected in the second half of 2026, with commercial operations targeted for early 2029. Moreover, the company has also hired a strategic advisor to help secure a long-term power purchase agreement.
NET Power Inc. is an energy technology company in the United States.
3. Larimar Therapeutics, Inc. (NASDAQ:LRMR)
Number of Hedge Fund Holders: 31
Larimar Therapeutics, Inc. (NASDAQ:LRMR) is one of the Best Small-Cap Growth Stocks to Invest In Now. Recently, on June 19, Samantha Semenkow, an analyst from Citi, maintained a Buy rating on Larimar Therapeutics, Inc. (NASDAQ:LRMR), with a price target of $14.
The firm noted that the bullish sentiment is based on the company’s lead drug candidate, Nomlabofusp, which is being developed for Friedreich’s ataxia, a rare genetic disease. The analyst highlighted several upcoming catalysts, including new open-label clinical data and a planned rolling submission to the FDA by June 2026. (Larimar has now submitted the first module of its rolling BLA seeking accelerated approval for nomlabofusp).
The analyst believes that the drug can help achieve a carrier-like state, where symptoms become minimal or non-existent. Moreover, the firm also expects expanded data covering patients treated for a full year to show continued improvement on key functional measures, while maintaining good safety results.
Larimar Therapeutics, Inc. develops treatments for rare diseases using its cell-penetrating peptide technology platform.
2. Verastem, Inc. (NASDAQ:VSTM)
Number of Hedge Fund Holders: 38
Verastem, Inc. (NASDAQ:VSTM) is one of the Best Small-Cap Growth Stocks to Invest In Now. Recently, on June 24, RBC Capital reiterated an Outperform rating on Verastem, Inc. (NASDAQ:VSTM) with a $15 price target. The firm noted that the bullish sentiment is based on the company’s G12D inhibitor drug program.
The firm noted that the G12D inhibitor program targets a specific genetic mutation found in certain cancers, and this is an important area of competitive drug development. The firm noted that they remain reassured on the drug’s efficacy and expect the results seen in patients outside the US to reasonably translate to US patients across the drug’s major target indications.
In terms of the safety profile, the firm sees some room for improvement, but overall sees the drug as market competitive. The update was based on early, preliminary Phase 1/2 data and safety data rather than full efficacy results. RBC expects a more complete data readout with longer patient follow-up in the second half of 2026.
Verastem Inc. is a biopharmaceutical company that develops and commercializes new medicines to improve the lives of patients diagnosed with RAS/MAPK pathway-driven cancers.
1. Compass Therapeutics, Inc. (NASDAQ:CMPX)
Number of Hedge Fund Holders: 44
Compass Therapeutics, Inc. (NASDAQ:CMPX) is one of the Best Small-Cap Growth Stocks to Invest In Now. Recently, on June 4, Citizens reiterated a Market Outperform rating on the stock with a price target of $10. The rating comes after the company presented new clinical data at the ASCO conference.
The data was regarding the company’s CTX-8371, which is a bispecific antibody that targets both PD-1 and PD-L1. PD-1 and PD-L1 are two related immune checkpoint proteins commonly targeted in cancer immunotherapy. The data showed that CTX-8371 showed early signs of activity in heavily pretreated patients across three difficult cancer types, including non-small cell lung cancer, triple-negative breast cancer, and classical Hodgkin lymphoma.
Looking ahead, several catalysts are expected for the stock. For instance, the company plans to meet with the FDA in August to discuss a path toward approval for a separate drug, Tovecimig. Additionally, updated CTX-8371 data and initial results from another candidate, CTX-10726, are both expected later in 2026.
Compass Therapeutics, Inc. is a clinical-stage biotechnology company developing antibody-based treatments for cancer.
