7 Small-Cap Stocks to Buy on the Dip or You’ll Be Kicking Yourself Later

  • With the market reeling, here are small-cap stocks to buy on the dip.
  • Ranger Oil (ROCC): An independent oil and gas firm, Ranger Oil will be relevant for the long haul.
  • Kratos Defense (KTOS): Military contractor Kratos Defense may be fundamentally undervalued.
  • NuScale Power (SMR): A new energy paradigm breathes life into NuScale Power.
  • Warby Parker (WRBY): Myopia trends may cynically augur well for Warby Parker.
  • Brookdale Senior Living (BKD): Age cohort trends imply growth for Brookdale Senior Living.
  • Arcturus Therapeutics (ARCT): Vaccine developments could bolster Arcturus Therapeutics.
  • Iamgold (IAG): With economic stability fears rising, Iamgold might be worth a small wager.
small-cap stocks to buy - 7 Small-Cap Stocks to Buy on the Dip or You’ll Be Kicking Yourself Later

Source: iQoncept / Shutterstock

With several worrying developments domestically and internationally, many investors chose to rush for the exits, though a brave few may have opportunities in small-cap stocks to buy on the dip. Tethered to small-capitalization companies, these market ideas don’t always grab the spotlight. But when they do, their relatively diminutive profiles occasionally enable massive profitability.

Effectively, small-cap stocks to buy are the equivalent of carrying small objects uphill rather than large ones. Scientifically speaking, you expend less effort and can go a greater distance carrying smaller, lighter objects. At the same time, when the wind blows, it can have a greater impact on underweight materials. Therefore, the size effect cuts both ways.

However, for the bold contrarians, small-cap stocks to buy currently offer an enticing opportunity. With the Federal Reserve making good on its earlier hawkish sentiments by raising interest rates until inflation comes under control, these under-the-radar plays feature significant price cuts.

Still, you’ve got to be ready for volatility. If you are, you may want to consider the below small-cap stocks to buy.

ROCC Ranger Oil $33.93
KTOS Kratos Defense $11.93
SMR NuScale Power $13.31
WRBY Warby Parker $12.97
BKD Brookdale Senior Living $4.88
ARCT Arcturus Therapeutics $13.83
IAG Iamgold $1.14

Ranger Oil (ROCC)

Illustration of oil pump jacks on sunset sky background to represent oil and gas stocks
Source: Shutterstock

Featuring a market value of just under $700 million, Ranger Oil (NASDAQ:ROCC) arguably represents a top idea among small-cap stocks to buy. An independent oil and natural gas firm, Ranger’s exposure to hydrocarbons ordinarily might conflict with society’s pivot to renewable energy. However, geopolitical flashpoints bring cynical tidings for ROCC.

When Russia invaded Ukraine in February of this year, it sparked a massive paradigm shift. Following the U.S. and Western allies’ sanctions against Russia, the Kremlin responded with natural gas outflow cuts to Europe. Now, the region faces a threatening energy crisis.

With hydrocarbons back in global good graces, Ranger Oil presents an attractive case for small-cap stocks to buy.

Kratos Defense (KTOS)

The front of a Kratos (KTOS) office in Silicon Valley.
Source: Michael Vi / Shutterstock.com

A defense contractor, Kratos Defense (NASDAQ:KTOS) features a market cap of $1.52 billion. While a bit higher than what I would like to focus on, astute contrarians should give KTOS a long look. Recently, for the Sept. 21 session, KTOS increased by 1.4%, a rarity amid a down day for the major indices. Obviously, the ongoing conflict in Ukraine raises interest in Kratos, which is known for its tactical unmanned aerial systems.

While the major defense players garner the most attention, Kratos could possibly gain relevance. Just recently, Russia ordered a partial mobilization of reservists, sparking protests and mad rushes for the borders. Investors see this ongoing conflict as a catalyst for increased defense spending. For small-cap stocks like KTOS, that provides an upside catalyst.

NuScale Power (SMR)

A hand in silhouette holds up a phone displaying the logo for Nuscale in front of a display showing the company's website.
Source: T. Schneider / Shutterstock.com

On a related note, Russia’s military aggression has emphasized the need for energy independence. Not surprisingly, in the early phase of the war, European leaders scrambled to fast-track their renewable energy initiatives. It’s a step in the right direction. However, these same leaders are howling at the wind. This conflict bolsters the need for energy diversity, which includes nuclear power. And that brings the discussion to NuScale Power (NYSE:SMR).

NuScale specializes in small modular reactors or SMRs. These innovative facilities feature a smaller physical footprint and greater ability to integrate in previous difficult geographies. As well, NuScale SMRs feature superior safety mechanisms and foster less-expensive building and operational protocols.

Fundamentally, SMRs can facilitate previously economically unviable (or unpractical) initiatives such as desalination. As well, the superior capacity factor (or measure of reliability) bodes well for SMR stock as one of the small-cap stocks to buy.

Warby Parker (WRBY)

A photograph looking through a glass window as a customer shops for Warby Parker (WRBY) glasses.
Source: rblfmr / Shutterstock.com

With a market cap of $1.5 billion, Warby Parker (NYSE:WRBY), which specializes in providing discount eyewear, features a valuation that’s a bit on the larger side of small-cap stocks to buy. Still, the fundamental narrative makes WRBY compelling for those seeking a discounted long-term opportunity.

For starters, you don’t even need to wait for a major market meltdown to feel as if you received a discount. On a year-to-date basis, WRBY suffered a staggering loss of nearly 70%. Moreover, at the time-of-writing price of $13, Warby Parker commands a hefty discount from its initial offering price of $40 a pop.

Still, you don’t want to just plow into small-cap stocks to buy exclusively focusing on the price. Fundamentally, Warby Parker benefits from high myopia prevalence. Moreover, experts project that by 2050, nearly half of the world’s population will be nearsighted. That suggests Warby enjoys a massive total addressable market.

Brookdale Senior Living (BKD)

brookdale senior living (BKD) website. worst investments of 2020
Source: Pavel Kapysh / Shutterstock.com

Coming in with a market value of $912 million, Brookdale Senior Living (NYSE:BKD) features a balance between established relevance and upside growth potential. Fundamentally, Brookdale, which owns and operates retirement homes across the U.S., commands one of the most potent cases for small-cap stocks to buy. Therefore, any dips potentially represent acquisition opportunities.

Back in July 2019, the millennial generation overtook baby boomers as America’s largest living generation. Considering that the baby boomers embodied an unprecedented increase in humanity following World War II, this narrative also implies that a significant number of people will enter retirement age.

Sure enough, the Pew Research Center validates this thesis, noting that the pace of boomer retirements has accelerated. All other things being equal, Brookdale focuses on an inevitable trajectory. Boomers have no choice to retire, as will millennials and Gen Z eventually. Therefore, BKD is a name you can trust for the long haul.

Arcturus Therapeutics (ARCT)

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

While few people want to endure a repeat of Covid-19, the global health crisis did present a silver lining in bringing new vaccines to the table. Amid the suffering, the best and brightest of humanity came together to develop a solution for the SARS-CoV-2 virus. Specifically, much attention centered on the messenger-RNA approach.

In fact, with the U.S. Food and Drug Administration giving its approval for an mRNA-based vaccine, it represented the first for the underlying approach. Subsequently, this major milestone bodes well for biotechnology firms like Arcturus Therapeutics (NASDAQ:ARCT). Specializing in global late-stage clinical medicines utilizing mRNA-based technologies, Arcturus hopes to be on the front line of forwarding therapeutics for rare diseases.

To be completely transparent, the biotech space features plenty of risk. Just look at ARCT, which hemorrhaged almost 64% of market value so far this year. Nevertheless, if you’re looking for a high-risk, high-reward opportunity among small-cap stocks to buy, Arcturus enjoys significant potential.

Iamgold (IAG)

An image of multiple gold bars
Source: Shutterstock

As a mid-tier gold mining firm, Iamgold (NYSE:IAG) understandably presents substantial risks. On a monetary basis, the framework for precious metals-related investments faces headwinds. With the Fed poised to continue raising interest rates until inflation comes under control, the prevailing ecosystem could feature deflation. Obviously, hard assets tend to outperform during inflation, making the introduction of the opposite circumstance problematic.

However, the precious metals complex also tends to rise on the fear trade. With global events becoming rather chaotic in recent months, investors may value the safety of hard assets more so than usual. Gold presents an ideal safe haven as it commands intrinsic value. It’s a debatable concept but the idea is that most folks recognize the rarity and significance of the yellow metal.

Still, IAG is one of the small-cap stocks to buy for hardened speculators. If deflation somehow becomes the overriding market force, the end result might not be pleasant for gold-related acquisitions.

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.

Article printed from InvestorPlace Media, https://investorplace.com/2022/09/7-small-cap-stocks-to-buy-on-the-dip-or-you-will-kick-yourself-later/.

©2024 InvestorPlace Media, LLC