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. (NASDAQ:OABI) 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. (NASDAQ:OABI) 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. (NASDAQ:OFIX) 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. (NASDAQ:OFIX) 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. (NASDAQ:OFIX) 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 (NASDAQ:TLS) 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. (NASDAQ:MVST) 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.
While we acknowledge the potential of MVST 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 MVST and that has 100x upside potential, check out our report about the cheapest AI stock.
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