5 Small-Cap Stocks That Are Diamonds in the Rough

  • These small-cap stocks provide investors an opportunity to invest in companies that don't have a lot of liquidity.
  • Coursera (COUR): An online educational platform that offers online courses, this is a play on the increase in remote learning.
  • Sunnova Energy International (NOVA) Residential solar companies will continue to do well due to secular tailwinds.
  • OptimizeRx (OPRX): Provides AI technology for companies can improve the quality of their patient's care.
  • Flywire (FLYW): An international payroll and payments management service that helps reduce the cost and hassle of international payments.
  • CarParts.com (PRTS): CarParts.com has a reputation for offering low prices on high-quality automotive parts and accessories.
Small-Cap Stocks - 5 Small-Cap Stocks That Are Diamonds in the Rough

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Small-cap stocks have a market capitalization of between $300 million to $2 billion. These stocks are often misunderstood to be risky and speculative. However, small-cap stocks are the best way for investors to get into the market at a lower cost and without having to worry about not having enough knowledge.

Small-cap stocks have the potential to outperform large-cap stocks because they tend to be more nimble and more flexible in their business models. This is because they need to compete with larger, better-known companies, so they need to be able to adjust quickly if there is a change in the market or in the company’s industry.

The most important thing for small caps is that they should have strong fundamentals – meaning that they must have good financials, sustainable revenue streams, and low debt levels – so that investors can trust them.

If you are willing to take on some risk, the following companies are worth investing in:

COUR Coursera $15.10
NOVA Sunnova Energy International $17.45
OPRX OptimizeRx $25.16
FLYW Flywire $14.87
PRTS CarParts.com $6.98

Small-Cap Stocks: Coursera (COUR)

The app page for Coursera is displayed on a smartphone screen with a website in the background.
Source: Postmodern Studio / Shutterstock.com

Remote learning is growing rapidly, and it is becoming a popular way for people to learn new skills. By 2026, the e-learning market is expected to reach almost $400 billion. This represents a significant increase from 2019’s market estimate of nearly $200 billion.

Coursera (NYSE:COUR) is a MOOC (massive open online course) platform that offers courses from top universities and organizations.

In 2012, Coursera started ensuring that world-class education was available to anyone, anywhere. They provide lots of free content with a lot of learning potential for you and are making it easier for students around the globe to discover how valuable some skill or subject can be.

Ten years later, many universities offer courses that are often free through Coursera, and the company has become a leading platform for higher education.

Coursera offers two courses: Specialization, a series of 4-7 related courses for a specialization certificate on the completion of all courses, or a series of individual classes.

As the number of remote learners grows exponentially, an influx of students looking to continue their academic learning is also growing. Higher education will always remain relevant. Hence, Coursera is doing well.

In its most recent quarter, it made revenues of $120.43 million, growing 36.3% over the year-ago period. Last year, the company saw revenues grow by 41% year-over-year, ending at $415 million.

Coursera is growing, and one cannot avoid it when discussing small-cap stocks.

Sunnova Energy International (NOVA)

A banner for Sunnova Energy International (NOVA) hangs on the New York Stock Exchange.
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Sunnova Energy International (NYSE:NOVA) is a global solar energy company that provides residential and commercial customers with clean, affordable, and reliable power.

The company has provided customers with clean, affordable and reliable solar power since 2006. Sunnova Energy has been expanding its service areas in the United States and internationally to provide more people with access to renewable energy.

Its services include rooftop solar panels, residential leasing programs, commercial leasing, battery storage solutions, home automation solutions and international partnerships.

Sunnova Energy is a leading U.S. residential solar service provider. The company currently holds 4-5% of the U.S. residential rooftop solar market share but has seen consistent growth over the past few months.

Solar panels are a good source of power for single-family homes, and only about 3% of the 84 million total households in the United States have rooftop solar right now. Sunnova, therefore, has a huge total addressable value to tap.

We’re a long way off from achieving our true potential, so it’s important to get started now in this niche segment. A recent extension of the U.S.’s investment tax credit for rooftop solar panels adds even more fuel to the fire and encourages grabbing these opportunities right now.

Small-Cap Stocks: OptimizeRx (OPRX)

Light blue pills on white background. Pharmaceutical industry, medical treatment, presciption drugs concept. Digital 3D render., biotech stocks, big pharma
Source: Hernan E. Schmidt / Shutterstock.com

OptimizeRx (NASDAQ:OPRX) is a company that builds solutions for the pharmacy industry and other health-related companies. They specialize in how technology, pharma companies, and healthcare providers work more closely together.

The team behind OptimizeRX has a lot of good ideas for how to generate future revenue. They plan on focusing more on digital spending by pharma companies and integrating our solutions with clients’ commercial planning.

OptimizeRX has an active business model that provides enterprise engagements and cross-selling services. Consequently, they experience more revenue within their existing client base.

When you look at companies in the healthcare sector, you should be on the lookout for new drugs that are coming to market. However, an aspect of this industry that can’t be overlooked is pharmaceutical sales calls. It’s so exciting to have a new drug validated by the FDA, but that’s just the beginning. Drug sales can’t happen until doctors prescribe the medication.

Prescribing physicians have seen more pharmaceutical reps over the past few years. Sometimes they’re visited almost daily to increase their revenue. OptimizeRx can reach more health professionals through the internet and use it to market pharmaceuticals. All this happens faster, easier, and with higher quality than the physical method.

Because of the lockdown, sales soared. The tricky thing will be managing expectations and ensuring the company is growing in the post-pandemic environment. In its most recent quarter, sales jumped to $13.73 million, an increase of 22.28%. Hence, so far, so good.

Flywire (FLYW)

calculator, pen, paper and a binder that says "payroll" on the side
Source: Shutterstock

Flywire (NASDAQ:FLYW) is a company that helps its clients to manage their international payroll and payments. The company has grown rapidly over the past few years as more companies outsource this process to third-party providers.

With Flywire, companies can send employees on international assignments without worrying about their payroll and payment needs. This includes tax withholding, remittances, currency conversion, and compliance with local employment laws.

Flywire is a payment processing company with experience in various industries, most recently the education, health care, and travel industries. With more than a decade of cumulative experience, Flywire’s entire platform can remove “friction points” and streamline the process for clients in any industry who are struggling with outdated processes.

Flywire’s end market is expected to grow in the next few years, and they’ll be able to take advantage of current customer retention.

Flywire makes money, though – it has just never been massively profitable. On the bright side, Flywire is in a good position and is doing well. The auto parts retailer saw revenues increase 43% to $64.6 million and recorded a gross margin of 60.1%.

Small-Cap Stocks: CarParts.com (PRTS)

A stack of auto parts
Source: Shutterstock

CarParts.com (NASDAQ:PRTS) is a company that specializes in selling car parts online.

CarParts.com provides its customers with a large selection of car parts for all makes and models. With over five million different parts available at any given time, CarParts.com offers customers the ability to find what they need when they need it without having to visit several different stores or websites to find what they are looking for.

The auto parts e-commerce company reported excellent top-line and bottom-line growth in its first quarter. The company said they increased revenue by 15% and beat everyone’s estimates.

Revenue increased 80% on a two-year basis when the pandemic was surging. Bottom-line results were good this past year, with record adjusted EBITDA of over $9 million and GAAP EPS of $0.04 per share, which beat estimates.

Like many e-commerce stocks, this company has seen its value soar and plunge. With the latest results, investors should feel more confident in this stock’s ability to rebound over the long term and be stable as the pandemic lessens.

On the publication date, Faizan Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Faizan Farooque is a contributing author for InvestorPlace.com and numerous other financial sites. Faizan has several years of experience in analyzing the stock market and was a former data journalist at S&P Global Market Intelligence. His passion is to help the average investor make more informed decisions regarding their portfolio.


Article printed from InvestorPlace Media, https://investorplace.com/2022/06/5-small-cap-stocks-that-are-diamonds-in-the-rough-cour-nova-oprx-flyw-prts/.

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