Some of the greatest opportunities can be found in small-cap stocks. For one, small-cap stocks offer great historical returns.
“One advantage of small-cap stocks is these companies can outperform large-cap stocks. Recent data published in the ‘Stocks, Bonds, Bills, Inflation (SBBI) Yearbook’ show that small-cap stocks returned 12.1 percent annually between 1926 and 2017 compared with large-cap stocks, which returned 10.2 percent annually during the same period,” notes U.S. News & World Report contributor Ellen Chang.
Two, when the U.S. economy comes out of recession, small-caps have historically outperformed large-cap stocks. In fact, that’s true in nine out of the last 10 recessions. Better still, with the worst of the coronavirus priced into the markets, the U.S. economy is slowly reopening, serving as another boon for small caps.
Three, most small-cap stocks are U.S.-centric, so they’re not impacted by tension with China, for example.
As markets recover with the economy, some of the top small-cap stocks to consider include:
Inseego Corp. (INSG)
The global switch to 5G is ushering in a revolution. President Donald Trump has said he wants 5G, even 6G technology in the U.S. as soon as possible. Analysts at Cowen say that by 2035, about $12.3 trillion worth of goods and services will be enabled by 5G networks.
News like that is a key driver for small-cap stocks like Inseego Corp.
“As we enter the next phase of 5G technology, we continue to work closely with scores of operators worldwide who are moving beyond tests and trials into full-scale commercial deployments towards mainstream adoption by both consumers and enterprise customers,” says company Chairman and CEO, Dan Mondor.
Canaccord Genuity analyst T. Michael Walkley just reiterated a buy rating on the stock with a price target of $13, thanks to demand and supply for mobile broadband, and 5G demand. “As evidenced by the company’s growing list of active 5G trials, Inseego’s growing sales team continues to build an impressive pipeline of new opportunities,” he said.
While growing demand for Inseego’s current products has resulted in very strong Q2/20 guidance, we anticipate strong revenue growth will continue in 2H/20 and beyond with expanding margins as the 5G opportunities ramp and the overall business scales.”
With 5G rolling out, I believe the INSG stock could retest $15 near-term.
Glu Mobile (GLUU)
Since bottoming out at $3.98 in March 2020, GLUU stock rocketed to a high of $10.50.
A big reason for that was the World Health Organization (WHO), which encouraged gaming during “stay at home” orders. “We’re at a crucial moment in defining outcomes of this pandemic. Games industry companies have a global audience – we encourage all to #PlayApartTogether. More physical distancing + other measures will help to flatten the curve + save lives,” said Ray Chambers, U.S. ambassador to WHO in a tweet.
However, that’s not the only catalyst for GLUU stock. Demand for mobile gaming has been incredibly explosive. More than 2.7 billion global gamers are expected to spend nearly $160 billion on games just this year, according to market researcher Newzoo. Better, mobile gaming could generate up to $77.2 billion this year – 13.9% growth year over year.
With solid mobile gaming growth ahead, I wouldn’t be shocked to see GLUU stock double, if not triple over the next year.
TG Therapeutics (TGTX)
The last time I weighed in on TG Therapeutics, it traded around $20 a share. Today, I still consider it to be one of the hottest biotech small-caps on the market at $22. Granted, the stock has already tripled from its low of $6.34 in March 2020, but there’s still plenty of momentum.
All thanks to its top-line results from its global UNITY-CLL Phase III trials evaluating a combination of drug treatments in patients with previously untreated and relapsed/refractory chronic lymphocytic leukemia (CLL). The company said its combination of umbralisib plus ublituximab — or U2 — had a “significant improvement in progression-free survival, and will be stopped early for superior efficacy,” as noted earlier this month.
Better, the study met its primary endpoint of progression-free survival and was stopped early for superior efficacy, as highlighted by TG Therapeutics. The company is looking to submit for regulatory approval by the end of the year.
Ian Cooper, an InvestorPlace.com contributor, has been analyzing stocks and options for web-based advisories since 1999. As of this writing, Ian Cooper did not hold a position in any of the aforementioned securities.