Small-cap stocks generally have a market capitalization of between $300 million and $2 billion. They can be riskier than investing in huge companies, but shares typically cost less, and the reward can also be higher. Because they are smaller, these are companies that have significant growth potential.
When the economy grows, small-cap stocks tend to perform better than larger stocks. With the U.S. economy starting to rev its engine as Covid-19 vaccines roll out, now is a great time to consider thinking small for big gains. Here are eight companies with plenty of cred you should be looking at.
Each of these small-cap stocks gets straight “A” ratings in Portfolio Grader. That’s an “A” quant grade, fundamental grade and total grade.
- Aviat Networks (NASDAQ:AVNW)
- Big 5 Sporting Goods (NASDAQ:BGFV)
- Clearfield (NASDAQ:CLFD)
- CTO Realty Growth (NYSE:CTO)
- Joint Corporation (NASDAQ:JYNT)
- Superior Group of Companies (NASDAQ:SGC)
- The Container Store Group (NYSE:TCS)
- Meridian Bioscience (NASDAQ:VIVO)
Small-Cap Stocks: Aviat Networks (AVNW)
Aviat Networks specializes in microwave broadband solutions. This allows for high-speed, wireless data transmission using a microwave radio link. In terms of infrastructure, that means a tower (for line of sight) and power. The modest requirements make microwave broadband ideal for rural deployment.
And Aviat Networks just landed a big contract from the U.S. government’s $20 billion Rural Digital Opportunity Fund (RDOF). AVNW stock popped 24% on the news of that contract.
Overall, it’s seen growth of 797% over the past 12 months, and Aviat Networks now has a market cap of over $397 million.
Big 5 Sporting Goods (BGFV)
Many retail stores had a rough year in 2020. However, some did better than others. There was a slew of retail bankruptcies as the pandemic and temporary store closings took a toll. Big 5 Sporting Goods was one of the retailers that fared better than most. In its second quarter of 2020, the company reported only a 4.2% drop in revenue compared to the previous year.
By the fourth quarter, same store sales at its 430 stores were up 10.5% year-over-year. Even better, Big 5 says same store sales are up by 20% so far in the first quarter of 2021. With sports starting to return to normal after a disrupted 2020, look for that trend to continue. This small-cap stock has a market cap of $333 million, with BGFV stock posting impressive gains of 1,152% over the past 12 months.
Minneapolis-based Clearfield is a networking company with a focus on fiber optics. Its products are used in fiber deployment for residential and commercial applications.
The pandemic resulted in the importance of high-speed internet being in the spotlight. Without a high-speed connection, video conferencing, remote work access, remote learning, video streaming and online video games simply aren’t possible. That emphasis on deploying high-speed internet has been a big boost for Clearfield. In its Q1 2021 earnings, the company reported:
“The $27.1 million we generated in revenue was a 40% increase over last year and marked the highest revenue level for any fiscal first quarter in Clearfield history.”
The increased demand for its fiber optics networking solutions helped CLFD stock post growth of 190% over the past 12 months, hitting a $407 million market cap. Clearfield projects that demand for its products will “accelerate” in 2021, which bodes well for ongoing gains.
CTO Realty Growth (CTO)
CTO Realty Growth is a small-cap stock, with a market capitalization of $307.5 million. The company owns and operates approximately 2.8 million square feet of income property in the United States. Its holdings are primarily comprised of office space and retail properties.
That mix may be setting off alarm bells. With stores seeing closures and reduced foot traffic, and many companies pivoting to remote workforces, requests for rent forgiveness and office downsizing were frequent headlines in 2020. Despite the challenges, CTO Realty says its January 2021 rent collection was at 99%.
That performance, despite a challenging environment, has helped power CTO stock to 23% growth so far in 2021. With an expected recovery this year — including in-person shopping making a comeback, and companies bringing many of their workers back to the office — the potential is there for continued growth.
Joint Corporation (JYNT)
Few companies are as perfectly positioned to benefit from 2020’s work-from-home trend as Joint Corporation. With remote workers sitting at the dining room table instead of relaxing in their ergonomic office chairs, back and neck strain has been endemic. Just what the chiropractor ordered! Joint Corp says that helped add 584,000 new patients in 2020.
JYNT stock is up 348% over the past year, and its market cap has grown to nearly $665 million. The chiropractic company had 10 clinics operating under its name in 2010, and growth since then has been phenomenal. In 2020, operations had expanded to 515 franchises and 64 company-owned locations. Joint Corp says it is on target to hit 1,000 locations by 2023.
All those sore backs and new customers should keep this small-cap stock’s growth trajectory in alignment.
Superior Group of Companies (SGC)
Florida’s Superior Group of Companies operates three primary lines of business: uniforms, promotional products and remote staffing solutions. Add another key product line, thanks to the pandemic: personal protective equipment (PPE). The company said that it sold $3.9 million worth of PPE in 2019, and $131.2 million worth in 2020.
The demand for PPE is expected to taper off as the pandemic comes under control. However, Superior Group says that all of its business segments saw organic growth in 2020, ranging from 18% on the year for remote staffing to 88% on the year for promotional products.
SGC stock delivered solid growth last April through August but has been stalled on a rollercoaster since, bouncing between the $20 and $28 levels. At this point, it’s delivered a return of 188% over the past 12 months. If sales continue to increase at 2020 levels, SGC could well break that $28 ceiling and keep going.
The Container Store Group (TCS)
Thank the “Marie Kondo” effect for tidying and organizing becoming one of the hottest home decorating trends. If anything, with time to kill at home and people looking to create more useable space, organizing became even more popular during the pandemic.
One retailer that’s benefited from this trend is The Container Store. It not only offers everything needed for home organization, but also the company has a custom closet business — a prefect upgrade for home renovators (another big pandemic trend).
This small-cap stock has been on a roll for the past year, with 406% growth. The home organization and closet upgrade business is showing no signs of slowing. In its last quarter, the Container Store Group reported its retail store sales were up 21% YoY, which makes TCS one of the small-cap stocks worth keeping an eye on.
Meridian Bioscience (VIVO)
Finally, a biotech company that’s seeing big growth thanks to its Covid-19 products, yet is still counted among small-cap stocks. Meridian Bioscience describes itself as a “leading large scale manufacturer of antibodies, viral antigens, recombinant proteins, PCR Enzymes, nucleotides and critical assay reagents.”
Meridian Bioscience products are a key component of medical testing systems that can check for everything from allergies to STDs and cancer. And yes, Meridian Bioscience also has a line of testing solutions for Covid-19. We’re going to be testing for the novel coronavirus and its variants for years, so the 251% growth streak VIVO stock has been on over the past 12 months is likely far from over.
On the date of publication, Louis Navellier had a long position in AVNW, BGFV, CFLD, JYNT, SGC, TCS and VIVO. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.
The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
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