7 No-Brainer Small-Cap Stocks to Buy if You Have Money to Invest

  • These small-cap stocks to buy offer potential rewards for patient investors.
  • Alpha and Omega Semiconductor (AOSL): AOSL’s EV applications may be key for greater integration.
  • Premier Financial (PFC): An Ohio-based community bank, Premier Financial benefits from millennial migration trends.
  • Amerisafe (AMSF): An aging workforce drives relevance for Amerisafe’s workers’ comp specialty.
  • Centerra Gold (CGAU): Though highly risky, the fear trade could eventually lift Centerra Gold.
  • PubMatic (PUBM): PubMatic’s programmatic digital advertising could gain from streaming shifts.
  • Sturm Ruger (RGR): Demand for Sturm Ruger’s industry continues to run red hot.
  • GoPro (GPRO): The action cam market could grow at a double-digit CAGR, boding well for GoPro.
Small-cap stocks to buy - 7 No-Brainer Small-Cap Stocks to Buy if You Have Money to Invest

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Although the current market situation isn’t the most encouraging, forward-thinking investors could use this time to strategize entry into no-brainer small-cap stocks to buy. Though no hard definition of small capitalization exists, typically, analysts reference this category to include companies with a market value between $300 million to $2 billion.

For the purposes of this article, I’m mostly concentrating on small-cap stocks to buy that ride just under the $1 billion level. While the $300 million companies offer enticement simply because of their high-risk, high-reward profile, they might incur significant volatility. After all, Federal Reserve chair Jerome Powell recently affirmed that the central bank will continue to tackle inflation.

That means higher benchmark interest rates, which doesn’t bode well for conspicuously underfinanced small-cap stocks to buy. Essentially, a higher borrowing cost environment eliminates certain financial options from the table. However, the larger of the small players could perform reasonably well.

Still, I must caution that the phrase “no brainer” refers to potential fundamental relevancies. No guarantees exist in the market and due diligence is a must. But if you’re willing to accept these risks, then the following small-cap stocks to buy might intrigue you.

Ticker Company Price
AOSL Alpha and Omega Semiconductor $36.29
PFC Premier Financial $27.51
AMSF Amerisafe $48.27
CGAU Centerra Gold $4.60
PUBM PubMatic $18.98
RGR Sturm Ruger $52.49
GPRO GoPro $6.05

Alpha and Omega Semiconductor (AOSL)

semiconductor stocks Close-up electronic circuit board. technology style concept. representing semiconductor stocks
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A technology firm with a herculean name, Alpha and Omega Semiconductor (NASDAQ:AOSL) — better known in the industry as AOS — may feature growing ties with the electric vehicle (EV) industry. With EVs becoming more prevalent on our roadways, infrastructure will be crucial. In the U.S., 63% of all housing units feature a garage or carport. Still, that leaves quite a few people without access to home charging platforms.

AOS may have the solution with its metal-oxide-semiconductor field-effect transistors (MOSFETs). Per its press release:

As the EV market accelerates into millions of units per year, vehicle manufacturers are increasingly implementing 800V electrical systems to reduce the system’s size and weight while increasing range and enabling significantly faster charging speeds. AOS’s 1200V automotive grade [MOSFETs] are specifically designed for these demanding applications by providing over standard silicon devices.

The other factor that makes AOS one of the small-cap stocks to buy is relatively strong financials. Per Gurufocus, the company ranks highly in growth metrics and features reasonably solid profitability metrics. Also, the company sports a subterranean price-earnings ratio of 2.4 times.

Premier Financial (PFC)

Toy houses rest atop stacks of coins while a hand dangles a set of keys in the air.
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A community bank based in Ohio, Premier Financial (NASDAQ:PFC) provides intrigue for investors of small-cap stocks to buy. As a general rule, higher interest rates might benefit financial firms due to expanded profitability for lending services. Of course, too high of rates may slow the economy so it’s not quite a win-win for PFC.

No, a better reason to like Premier is the focused nature of the business model. Primarily, local institutions understand local needs and thus provide superior services. Further, big banks often link themselves to international concerns. Without that baggage, Premier might be better insulated from broader economic shocks.

Also, the financial firm may benefit from migration trends. Well before the Covid-19 pandemic, millennials began moving to major cities in Ohio. After Covid-19 changed social and economic paradigms, Ohio continues to receive interest from younger people.

In other words, people are increasingly eyeballing the Buckeye State, meaning PFC is sitting on a demographic goldmine.

Amerisafe (AMSF)

Illustrative Editorial of AMERISAFE (AMSF) Inc website homepage. AMERISAFE Inc logo visible on display screen.
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Amerisafe (NASDAQ:AMSF) specializes in workers’ compensation. In fact, the company’s website states that it’s “all we do.” Of course, workers’ comp isn’t exactly the most popular topic for small-cap stocks to buy or any equity category. Still, AMSF delivers surprising relevance to the market.

According to the industry publication Business Insurance, the “workers compensation sector remains a relatively stable and profitable segment of the commercial insurance industry, but some claims are getting pricier and concerns over severity are rising.” Contributing factors include the “aging workforce, medical inflation spurred in part by expensive medical technology, and rising wages.”

Considering that a particularly onerous workers’ comp case could cripple small-to-medium-sized enterprises, Amerisafe delivers peace of mind. Yes, companies are looking to cut costs. However, certain costs cannot be cut because doing so raises the risk of catastrophic damages.

Finally, Amerisafe features robust strengths in its books, particularly its no-debt profile. Also, it has a net margin of 15.6%, better than the industry median of 5.9%.

Centerra Gold (CGAU)

Mine workers pushing carts in mountainous region.
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If you want to speculate with your small-cap stocks to buy, mining firm Centerra Gold (NYSE:CGAU) is one such play. To be clear, few analysts want to touch CGAU. Recently, the company reported a larger-than-expected loss for the second quarter. Further, management also revealed problems at one of its mines. Therefore, over the trailing month ended Sept. 1, shares hemorrhaged over 29% of market value.

Still, the contrarian might point out that in the trailing five days, the losses were 5.3%. Therefore, the pain has decelerated. On a broader level, though, Centerra might offer longer-term relevance based on the fear trade. Certainly, a higher interest rate environment works against the underlying gold asset. However, gold also attracts attention as a longstanding historical safe haven.

If you’re willing to gamble that Centerra’s problems are temporary, the company features robust financial strengths. As well, Centerra has a net margin of 41.8%, far higher than the industry median of 4.5%. Finally, the mining firm features a forward PE of 7.7 times, below the industry median of 10.3.

PubMatic (PUBM)

The company sign is seen at the headquarters of PubMatic, an American digital advertising technology company for premium content creators.
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Perhaps an even risker idea than Centerra is PubMatic (NASDAQ:PUBM). Specializing in programmatic digital advertising, PubMatic runs square into an economic problem. In particular, tech layoffs have accelerated this year. What’s more worrying is that these layoffs include high-profile companies that integrate digital ads as part of their business models.

However, PubMatic could enjoy a reprieve through streaming services. With major companies like Netflix (NASDAQ:NFLX) and Disney (NYSE:DIS) offering reduced fees in exchange for ad-driven content, this framework opens doors for PubMatic. To be sure, it’s not a guarantee because the competition will be intense. Nevertheless, it could translate to PUBM being a high-risk, high-reward prospect.

On a year-to-date basis, PUBM is down nearly 43%.

Another factor to consider is PubMatic’s reasonably solid financials. In particular, the company has a net margin of 21.6%, which is much higher than the industry median of 1.9%.

Sturm Ruger (RGR)

An LCP Custom handgun manufactured by Sturm Ruger (RGR).
Source: Susan Law Cain / Shutterstock.com

Acknowledging that it’s not everyone’s cup of tea, Sturm Ruger (NYSE:RGR) still represents an important cog in the economy. For one thing, the underlying firearms industry puts food on the table for several American households. As a Forbes article pointed out, a booming gun industry is adding more jobs to the labor market.

You can best believe that under these trying times, few politicians will call for the elimination of the firearms industry. Simply, it opens criticism to opposition views which will leverage said elimination as an attack on American workers.

The other major catalyst supporting the idea of RGR as one of the small-cap stocks to buy is demand. According to data from the FBI, gun sales boomed in 2020 and 2021. While it’s not possible to speak to every motivating factor, it’s likely that, to some extent, concerns of social unrest sparked these sales.

As well, 2022 is on pace to deliver sales that exceed pre-pandemic highs. Thus, the opportunity in RGR exists, if you’re so inclined.

GoPro (GPRO)

image of a white GoPro (GPRO) branded camera
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Another name for the speculating types, GoPro (NASDAQ:GPRO) has become synonymous with the underlying action camera industry. In fact, according to data from Statista, GoPro represents the sector leader. Just from an observational stance, you don’t see too many other competitors in the field. It’s GoPro or nothing.

To be fair, GPRO is a downright risky name, even compared to other speculative small-cap stocks to buy. Since the start of the year, GPRO shed 44% of its market value. However, its saving grace may come from its brand power.

Based on one estimate, the action camera market could grow to $23.33 billion by 2030, representing a compound annual growth rate of 14.4%. Considering GoPro’s dominance in the space, it could haul in the lion’s share of this projected demand.

As an added bonus, Gurufocus considers GPRO to be “modestly undervalued.” A highlight is the company’s forward PE of 7.6 times, lower than the industry median of nearly 16.

On the date of publication, Josh Enomoto 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.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.


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